Voluntary contributions to the pension fund can also be worthwhile for business owners.

If there are contribution gaps in the pension fund, it generally makes sense for the insured to make voluntary purchases from a tax perspective. The question now arises as to how the owners of a corporation or a limited liability company can take advantage of this. This blog post provides information on the tax saving opportunities for company owners.

If there is a contribution gap, which is the case for most insured, they have the option to make voluntary purchases into the pension fund and thus reduce the contribution gap. These purchases can then be deducted from taxes. In principle, a contribution gap occurs especially with salary increases, but also with a shorter contribution duration due to interruptions in employment (e.g., due to longer education, maternity leave, or due to temporary unemployment), with an increase in working hours, or in the case of a divorce. Regarding the salary increase, the following reasoning applies: Since the pension funds assume when calculating the purchase amount that the insured have been earning their current salary since the beginning of their contribution obligation (from January 1 after reaching the age of 24), the calculated retirement capital in the case of salary increases is higher than the actually saved capital, which is why there is a contribution gap.

How company owners can utilize the option of voluntary purchases into the pension fund for tax optimization...

The basic idea is to combine a dividend cut with a simultaneous salary increase to save corporate income taxes on the one hand and to achieve private tax savings due to pension fund purchases on the other hand.

Instead of distributing the company profit predominantly through dividends, for tax reasons, it makes sense for owners of corporations and limited liability companies to keep dividends as low as possible and to pay out the profit through an increased salary. Higher salary payments reduce the company profit, resulting in lower corporate income taxes. Consequently, the dividend payments are lower. And thus the burden of "multiply" taxed dividends (corporate level and private level) is reduced. However, an increase in salary leads to an increase in private taxes. In addition, old-age and survivors' insurance (AHV) contributions and pension fund contributions also increase, both for the private individual and for the company. However, if the company owner takes advantage of the pension fund purchase option, the purchase amount can be deducted from the taxable income. The salary increase causes a contribution gap, which enables the company owner to make a voluntary purchase into the pension fund. He can benefit from tax reductions. In addition, his retirement capital is increased, which results in a higher pension at the time of retirement.

Conclusion: The possibility of pension fund purchases enables company owners to achieve tax burdens at the corporate level as well as privately. However, it should be mentioned that each individual case needs to be considered separately. Since the benefit varies depending on individual circumstances, it should be precisely determined in advance. In this regard, it is best to contact your trustee.