Today, I will talk about the situation concerning the payment of a benefit such as a survivor's pension from a spouse who died in Switzerland. In brief: we were approached by the widower of a wife who died in Switzerland and had worked in Switzerland for 12 years. Prior to her employment on Swiss territory, she had worked for more than 5 years on German territory. The period of employment in Poland, on the other hand, was negligible.
Therefore, I have decided to prepare and share a case study with you. Based on it, I will answer the following questions:
- Which country should be obliged to pay the pension in a particular case?
- Is it necessary to pay income tax on benefits from abroad while living in Poland?
- how to start the whole procedure and apply for this type of benefit?
I invite you to read!
Survivor pension from Switzerland - what was our client's problem?
The client's question was:
- which country will pay a survivor's pension for him and his six-year-old daughter, and
- whether he will have to pay on the entire survivor's pension paid from abroad in Poland, where he intends to carry out, health contributions and income tax?
Let's start with how the current legislation addresses this issue?
It is worth starting from the fact that if a person dies, his or her surviving relatives may be entitled to a so-called survivor's pension. The specific benefits in this regard (and also the potential beneficiaries) vary depending on the specific European Union and European Free Trade Area (EFTA) country. However, the rules for applying for this benefit are set by EU regulations.
Where to apply for a survivor pension?
The application for a survivor's pension is submitted to the pension insurance institution in the country where the deceased lived or worked. This body will process the application and send it to the competent country where insurance contributions were paid.
What if the deceased received a pension or salary from several EU countries? Then the country which should pay the death or survivor's pension will be the country where:
- the deceased's last residence (as long as that country paid the pension) or
- the country in which it has paid social security contributions for the longest time.
Our client lives with his daughter in the territory of Switzerland. This is where his wife last worked and lived and also died. Therefore to it is in Switzerland that he should make the appropriate applications to the pension institution, which is AHV-iv.ch. for payment of his wife's so-called survivor's pension.
The spouse also worked in DE for 5 years before coming to Switzerland. Therefore, she has acquired the right to a pension in DE and the pension authority in Switzerland will act accordingly. First of all, she will inform the pension authority in Germany about her husband's claim for a survivor's pension.
Read also: Alimony from abroad - how to effectively enforce it?
When is the survivor's pension paid?
It should be noted that a survivor's pension is paid when specific conditions are met. These apply in the territory of the European Union or EFTA Member State concerned.
Our client intends to move permanently to Poland. The survivor's pension will therefore be credited to his bank account in a Polish bank. Under current Polish law, the bank acts as a payer and is obliged to collect advance personal income tax and health insurance premiums. The legal basis for this will be Personal Income Tax Act and Act on publicly funded healthcare services.
Survivor pension from Switzerland - how much income tax will it be?
The health contribution rate is currently 9% of the assessment base. If the benefit comes from EU or EFTA countries or the UK, the health contribution is only charged if the beneficiary has received a Polish pension or pension that is subject to health insurance. The legitimacy of the deduction of health contributions is verified individually by the Mazovian Branch of the National Health Fund Shared Services Centre in Płock.
Advances on income tax are deducted on the basis of double taxation treaties concluded by Poland. Their provisions specify precisely whether tax is levied in the country from which the benefit flows, or in the country where the recipient of the benefit lives, or in both countries simultaneously. The bank into whose account foreign benefits are paid should issue PIT-11 information by the end of February each year, which should be taken into account in the annual tax return.
Read also: Division of spouses' property abroad - which court will have jurisdiction?
