What are the differences in taxation between branch 21 and branch 23?

In terms of taxation, there are differences between branch 21 life insurance (which offers guaranteed capital and/or guaranteed return) and branch 23 policies (which generally do not offer a guaranteed return). They are:

Tax benefit

  • In the case of branch 21 life insurance, you can take advantage of the pension savings system with a tax benefit (€980 maximum premium in 2019 in the traditional scheme (tax benefit of 30%) or up to €1,260 in the new plan (tax benefit of 25%)) or of the long-term savings system (€2,350 maximum premium in 2019).
  • A branch 23 solution is only possible in the pension savings system.

Tax on premiums

In the case of a branch 21 policy, you pay a 2% tax on the premium unless it is a pension savings insurance policy. This is exactly the same for branch 23 insurance.

Withholding tax

  • In the case of branch 21 insurance, you pay the withholding tax (on a notional return of 4.75%) if the policy has not existed for more than eight years or if you withdraw your money before the end of the eighth year. The withholding tax is calculated on a notional return of 4.75%.
  • In the case of a branch 23 product, you do not pay a withholding tax, unless your policy provides for additional performance guarantees (structured products). This withholding tax is therefore calculated based on the real value, and not on a notional return of 4.75%.

Final taxation

  • In the case of branch 21 insurance, you pay the tax on long-term savings if you have received a tax benefit (at least once). If you have never received a tax benefit on the premiums, then there is no tax on the accumulated capital.
  • For a branch 23 policy, you do not pay tax on the final capital.

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