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Taxation of payments

An income tax rate of 20% is applicable for all sums withdrawn from the insurance contract or pension fund before the person becomes 55 years old.

If the sum accrued through the supplementary funded pension products is taken into use from the age of 55 or when a person becomes fully and permanently incapable of work, income tax incentives are applied to the payments.

The following taxation aspects have to be taken into account when payments are made from the supplementary funded pension:

  • 20% income tax is charged on partial or full repurchase of the insurance or redemption of the unit(s) of the fund,
  • No income tax is charged on the indemnities of death insurance paid on the basis of the supplementary funded pension insurance contract if the contract was concluded after 1 May 2002,
  • Income tax is charged on the death insurance indemnities paid on the basis of the supplementary funded pension insurance contract concluded before 1 May 2002. (Reason: If the contract was concluded before 1 May 2002, the resident natural person is allowed to deduct the part of insurance premiums paid on the basis of the contract, the aim of which is to ensure payment of the sum insured as death indemnity, from his or her revenue of the taxation period),
  • 10% income tax is charged on the payments if a person has become fully and permanently incapable of work,
  • Income tax is not charged on lifetime payments from an insurance company (annuity) paid monthly or quarterly if a person has become fully and permanently incapable of work.
  • The payments are taxed with 20% income tax if less than 5 years have passed since the conclusion of the contract or first acquisition of redeemable units,
  • Single and fixed-term (expiry date of the contract has been agreed on) payments are taxed with 10% income tax if more than 5 years have passed since the conclusion of the contract or first acquisition of redeemable units,
  • Lifetime payments from an insurance company (annuity) are not taxed with income tax if more than 5 years have passed since the conclusion of the contract or first acquisition of units redeemable on the basis of the sum transferred to the insurance contract.

The payments made to the successors who are natural persons on the basis of all different products are taxable with the income tax of 20%.