In this article
To understand taxation when withdrawing from a PER, start by identifying the origin of the amounts received and the tax treatment of the contributions during the savings phase. This distinction helps you interpret the reporting instructions when the plan is closed.
The PER is a long-term savings plan that allows you to receive a life annuity or, optionally, a lump sum at retirement. Before looking for a line on your tax return, also identify the form of the amount received and the type of plan involved.
Deduction on contribution: what to check
Contributions paid into a PER are deductible from income tax. However, deductible amounts are subject to a ceiling.
You can waive this deduction; doing so results in lighter taxation when you withdraw from the plan. To prepare your tax return, check which contributions were deducted and which were not.
To trace this treatment, review your income tax returns from the savings period. The tax authority says that deductible contributions must be declared under “Deductible expenses (alimony, retirement savings ..)”, at step 3 of the online income tax return.
The deduction applies in particular to new individual PERIN plans and company PERO or PERECO plans. Keep the name of your plan handy: the withdrawal instructions below distinguish these plans from other retirement savings arrangements.
Before filing: organize the information
Work through the following questions to read the tax instructions in the right order:
- What type of plan is it: PERIN, PERO, PERECO or another arrangement?
- Is the amount received an annuity or a lump sum?
- Were the contributions from which the amount originated deducted for income tax purposes?
- Does the amount come from employee savings?
Keep these distinctions in mind when consulting your documents and completing your tax return. If the origin or treatment of a contribution remains uncertain, seek clarification before choosing a line: the plan name alone does not answer all these questions.
Annuity withdrawals: distinguish the origin of the amounts
A life annuity is an amount paid periodically until the beneficiary’s death. Annuities must be declared under “Pensions, retirement benefits, annuities, life annuities for consideration” at step 3 of the online tax return.
The tax authority says to declare annuities received on withdrawal from a PERO, PERIN or PERECO on lines 1AS to 1DS. However, it makes a distinction based on the origin of the amounts.
Annuities from a PERO, PERIN or PERECO that originate from contributions not deducted for income tax purposes or from employee savings are declared on lines 1AW to 1DW, not lines 1AS to 1DS.
For an annuity, do not stop at the general section alone: also compare the origin shown in your documents with the cases described by the tax authority. This helps distinguish the general line from the one intended for non-deducted contributions or employee savings.
PER lump-sum withdrawal: which line to check?
For a lump-sum withdrawal, start by checking the breakdown of the amounts provided by the plan administrator. Again, first identify the plan and the origin of the amount, then examine the corresponding line.
For a PERO, PERIN or PERECO, the portion of the lump sum declared on lines 1AI to 1DI is taxable at the progressive income tax rates, without an allowance and without the option of using the 7,5 % flat rate.
If part of the lump sum comes from non-deducted voluntary contributions or employee savings, ask the plan administrator to distinguish between contributions, gains and reportable amounts. Compare its tax statement with the tax return guidance for the relevant year.
The instructions differ for certain other arrangements: the tax authority refers to lines 1AS to 1DS for lump sums from PERP, Préfon, Madelin contracts and “article 83”, unless taxation at the 7,5 % flat rate or the quotient system is chosen.
Therefore, do not apply a line from one arrangement to another without checking the stated conditions. The references to lump sums and annuities each relate to a particular withdrawal situation: use the one that corresponds to the amounts you received.
A check before filling in the lines
Return to your tax returns from the savings phase to establish how the contributions were treated, then compare this information with the type of plan and the form of withdrawal. If your documents show several origins, take care to distinguish them rather than assuming that all the amounts belong on the same line.
These instructions are general information, not personalized advice. Check the origin of the amounts and the lines applicable to your situation before completing your tax return.