Tax exemption applicable on any pension income derived on, or after 1 January 2022, by an individual who is at least 61 years old.
A new tax exemption pertaining to pension income has been introduced through the publication of Legal Notice LN 98 of 2022, which was recently amended by Legal Notice 220 of 2022 – the updated legislation is entitled Pensions (Tax Exemption) Rules.
The Rules shall be applicable on pension income derived on, or after 1 January 2022, by an individual, who is at least sixty-one (61) years old in the year in which the pension income is received. Such income shall be partially or fully exempt from tax as follows:
|
Applicability of the exemption |
Amount exempt |
|
Pension income derived in the year immediately preceding the year of assessment 2023 |
Twenty percent (20%), but not exceeding two thousand, eight hundred and sixty-four Euro (€2,864) |
|
Pension income derived in the year immediately preceding the year of assessment 2024 |
Forty percent (40%), but not exceeding five thousand, seven hundred and twenty-seven Euro (€5,727) |
|
Pension income derived in the year immediately preceding the year of assessment 2025 |
Sixty percent (60%), but not exceeding eight thousand, five hundred and ninety-one Euro (€8,591) |
|
Pension income derived in the year immediately preceding the year of assessment 2026 |
Eighty percent (80%), but not exceeding eleven thousand four hundred and fifty-four Euro (€11,454) |
|
Pension income derived in the year immediately preceding the year of assessment 2027 |
One hundred percent (100%), but not exceeding fourteen thousand, three hundred and eighteen Euro (€14,318) |
The above-mentioned Rules have also brought about a consequential amendment to the Tax Rebate (Pensioners) Rules. The term 'pensions income' in the Tax Rebate (Pensioners) Rules is to refer to the amount of pension income that is included in the total income.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.