Filenews 23 May 2024
The Tax Department informed that the retrospective adjustments of Pension Fund contributions (cut-offs/refunds), for the purpose of implementing the new pension plan, which appear in the remuneration certificate of the year 2023, do not affect and should not be included in the Individual's Income Statement for the year 2023.
It should be noted, however, that if for all the years that retrospective adjustments were made (deductions/refunds) there is a cumulative amount, which should be paid to the state as an additional contribution to a pension fund, then for this amount the right to deduct is granted in Part 5C of the Person's Income Statement for the year 2024 and beyond (year of payment/withholding), for the reason that the payment began in 2024.
For employees in the Public Sector, the above amounts will be reflected in the payroll statement of the 13th salary of 2024 and the following years (where applicable) with the description "Pension Loan". For employees in the Wider Public Sector, including Local Government Authorities, those affected should contact the accounting departments of the organizations working for clarifications.
It is noted that retrospective adjustments that result cumulatively (for all years) in a refundable amount, are exempt from income tax under article 8 (11) of the Income Tax Law and are not declared as income in the Tax Return.
Finally, it is mentioned that for cases of Civil Servants who retire and still have outstanding debts, the deduction is made from the lump sum they receive upon retirement and the relevant amount is declared in the Tax Return of the year of retirement as a pension fund deduction in PART 5C. This amount is indicated in the letter sent by the Treasury on retirement.
