When financing a German company pension do not just think about risk and return, but also about specific tax regulations which might be favourable in your case.
If you are planning to buy investment funds for financing your company pension, tax deferral effects are particularly important due to the very long investment horizon.
Investment income is normally taxed immediately. The tax burden is often roughly a quarter of it. Under certain circumstances investment income from German company pensions is not taxed directly and therefore can fully be reinvested and additionally finance the company pension.
When using the tax deferral option a full financing of the company pension can be reached quicker and earlier. Afterwards free cash flow can be used for other investments in the company.
The German tax law on investment funds is rather complicated. It is therefore highly recommended to organize a perfect information flow between the different functions such as financing, accounting and tax.
Info@djm-steuerberatungsgesellschaft.de
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