IPT

If your company holds an IPT, note that this policy has to be checked every year for tax deductibility. We do that by calculating the so-called 80% rule for each self-employed director concerned, for each financial year. Perhaps your company is paying too much premium? Then you risk part of that premium being disallowed for tax. Perhaps your company could pay in much more premium than it does now? Then you risk missing out on tax relief, and moreover building up too small a supplementary pension through your company. Life Experts follows up this potential optimisation every year. We do so proactively and in line with the financial year end of the company concerned. Unlike many intermediaries, Life Experts makes full use of all the information we hold, so that you as the client do not have to supply everything again each year.

The individual pension commitment is a Belgian second-pillar pension arrangement. Unlike a group insurance, an IPT can be taken out for a single person. Its first purpose is to build a supplementary retirement pension. The agreement can also provide a payout if you die before pension age, through illness or accident. Finally, many IPTs provide a monthly supplementary income if you become unable to work during your career. After the VAPZ (the free supplementary pension for the self-employed), the IPT is regarded as the most tax-efficient vehicle in the second and third pillars.

The premium for an IPT is paid by the company and is 100% deductible against corporation tax, as long as the 80% rule is not exceeded. This 80% rule takes account of your last normal annual gross salary, your career, your estimated state pension, the second-pillar pension capital you have already built up, and a conversion coefficient. Our experts prepare that calculation for you. A premium tax of 4.4% is due on each premium payment for the life and death element, and 9.60% on the disability element.

When the capital is paid out on retirement, a RIZIV (the national health and disability insurance institute) contribution of 3.55% is deducted first, then a solidarity contribution of 0 to 2%. The remaining capital (contributions plus guaranteed return) is then taxed at between 10% and 20% depending on the age at which you stop working, plus municipal surcharges. In most cases where you stay active until pension age and your IPT is paid out on your statutory pension, the overall tax burden on the capital built up comes to 15.08%, which is of course very favourable.

If the IPT was used to buy, build or renovate your sole and own home through the advance system, the first tranche of 82,780 euros (assessment year 2021) is taxed separately under the notional annuity regime rather than at the rates above. As with the final taxation of a VAPZ or a RIZIV contract, the notional annuity is taxed on 80% if you remain professionally active until retirement.

All self-employed company directors who pay themselves a regular salary and have enough fiscal room in their so-called 80% rule. For completeness, we note that an IPT is possible for employees under certain (restrictive) conditions.

An IPT can be taken out in branch 21, in branch 23, or a combination of both. That combination is often called branch 44 in the trade. It does not legally exist, but the nod to combining the two branches is clear. Which suits you depends partly on your investor profile. Life Experts gives tailored advice, which is why we want to know what type of investor you are. Are you prepared to take risk when you invest your money, or do you prefer more certainty so that you get at least your savings back? To establish your investor profile as precisely as possible, Life Experts built its own online profile test, so we can assess your contract very efficiently on both fiscal and financial grounds. Would you like to know more about investing in branch 23? Then be sure to read this article, and take a look at the fund pages of our insurers.

Do you have a company and have that company pay your VAPZ? Then be sure to pay your VAPZ contract on a monthly or quarterly basis. That way, the benefit in kind that the VAPZ premium creates also counts as normal last annual gross salary when determining your 80% rule for your IPT or group insurance.

Above all, let our experts guide you. Read more about it here.

Read more here about the difference between an internal pension provision and an IPT, and what you can do with your internal provision.

It is generally assumed that a VAPZ is more tax-efficient than an IPT. Take proper advice, because that depends on your personal situation and is no longer always the case. Below you will find a short comparison table of the VAPZ and the IPT.