The investment in a pension plan “PGBL” (Free Generating Benefit Plan) can deduct up to 12% of the gross annual taxable revenue from Income Tax (IR). For this benefit, the taxpayer must use the complete Annual Adjustment Statement (DAA) form, and contracting or input in this private pension plan must be by December 30, 2020 (the last banking day of the year).
The taxpayer must also contribute to Social Security or to the public servants regime. If the plan is in behalf of dependents over 16 years-old, they must also be Social Security contributors.
When opting for investing in PGBL, the taxpayer postpones the IR payment, since the tax is only charged at the redemption of the accrued value (formed by the investments and the income obtained).
We warn you to the important decision about the tax regime at the total or partial redemption of PGBL. The investor may opt for the progressive or regressive taxation .
The option for a progressive taxation means that the progressive IR taxation table will be applied. The rates range from 0% to 27.5% depending on the amount of the redemption made.
In this modality, the redemption is considered a taxable income subject to the DAA. Thus, the PGBL custodian institution will provide the 15% tax withhold. At the DAA reporting, the redemption must be posted as Taxable Income Received from Legal Entities by the Holder and/or Dependents and will influence the result of the annual tax due. The 15% withheld tax will be considered as tax already paid and the taxpayer must supplement the tax payment, or receive a refund according to the result of the DAA.
The option for regressive taxation varies from 35% to 10% according to the time between investment and redemption. Each contribution has its period individually considered.
The rate starts at 35% and is reduced by 5% every two years until it reaches the minimum rate of 10% tax. Contributions made 10 years ago or more will be in the minimum tax range when redeemed.
In this modality, the taxation is considered exclusive of source, as a standard financial application (CDB, for example), that is, the taxpayer must include the redemption amount net of taxes in the in DAA’s table “Rendimentos Sujeitos à Tributação Exclusiva de Fonte” (Income Subject to Exclusive Taxation at Source).
Note: Before opting for the taxation system, the taxpayer must simulate which IR statement model best fits to the reality, not forgetting to make an input to the PGBL within the deadline.
Check your income and private pension plan statements To find out what amounts should be reported as income and redemptions.
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