The Unpleasant Surprises of PER Taxation
Here is a saver who learned the hard way that the tax treatment of voluntary contributions to a group PER, while offering certain advantages, can also hold some unpleasant surprises. In fact, Ms. G paid 12,000 euros in excess income tax due to incorrect information provided by her account manager.
It all began in 2020, when Ms. G decided to make a voluntary contribution of 40,200 euros to her group PER after selling a property. Hoping to purchase her primary residence in the near future, she asked her account manager about the tax consequences of an early withdrawal. Unfortunately, the information she received during a phone call turned out to be incorrect: she was told that it was possible to make a voluntary contribution deductible from her taxable income without the withdrawn amount being taxed in the event of early withdrawal.
Armed with this information, Ms. G made the payment and deducted it from her 2020 income, thereby reducing her income tax to zero. But in April 2021, when she requested early access to the funds to purchase her primary residence, she discovered that the entire amount released had been added back to her taxable income, bringing her tax bill to 12,018 euros.
After receiving an explanation from her account manager, Ms. G filed a complaint with the AMF Ombudsman to seek redress, believing she had been the victim of a serious failure to provide information at the time of her payment. The Ombudsman concluded that the erroneous information was a decisive factor in Ms. G’s decision to make the payment and that this led to an excess tax liability whose full extent she had been unable to assess. He therefore proposed that the account holder compensate Ms. G for 90% of her excess tax liability, amounting to a total of 8,606 euros.
The account custodian accepted the Ombudsman’s proposal and compensated Ms. G. This example illustrates the importance of thoroughly understanding the tax implications of making voluntary contributions to a group PER before proceeding.
