Effects of the new divorce law on direct taxes - Part 2: The effects

By 2017, there were changes in divorce law. These primarily concern changes related to the division of pensions and retirement provisions. This has a direct impact on direct taxes. In a first article, the changes were pointed out. This second article explains the implications.

Effects on tax law

‍According to Art. 33 Abs. 1 lit. d DBG, generally all contributions to pension schemes are deductible from taxes. It is not even necessary for the contribution to be made into one’s own pension scheme. The only criterion is that the contribution should increase the provision within the possible purchase gap, which will be taxed again upon disbursement.Suppose a person, who is already of retirement age, is obliged in a divorce to pay an amount into the pension scheme of the spouse. If the obligated party can afford to make this contribution from his free assets, then this amount is deductible from taxes. For the beneficiary, the transaction is tax-neutral.

If divorce occurs before the occurrence of the pension case, the obligated spouse has to transfer a part of the pension assets to another pension institution for the beneficiary. If he cannot make this transfer from his free assets and has to resort to his pension, then he has the right to buy back into the pension within the transferred termination benefits.Findea helps you keep your taxes simple and straightforward.