The situation regarding the intentions of the Government to tax the premiums paid by an employer to an employee under a collective pension-saving plan as income remains uncertain.

A few days ago, the insurance market sounded the alarm on hearing the news that the government plans to tax allowances and the gross sum received by employees, amounts which included compensations received by those insured in group insurance business programs.

Last Friday, the Finance Ministry sources said that the government was going to back off on this issue however, it was not entirely clear whether the same would be true for group contracts and insurance companies.

However, the Association of Insurance Companies of Greece had earlier contacted the Finance Ministry, asking not to tax group programs, since a similar arrangement would lead to the closure of the Group insurance industry and the leaving of the domestic market by some of the world's largest insurance companies.

In a letter to the Deputy Minister of Finance, G. MAVRAGANI, the Association pointed out that the benefits of such programs in the bud does not constitute income to the workers. They have access to them only after a lapse of many years, and only under certain conditions.

The Association noted that a similar arrangement would constitute unjustified discrimination between workers and lead to losses rather than an increase in revenues after it froze an entire insurance branch. The usual European practice provides special arrangements for taxing these premiums.

The Association added that the state can expect a significant tax benefit if they impose a tax, up to a reasonable percentage, on the insured amount paid at maturity and for the part relating to the transfer of the employing company. In a rule proposed on behalf of the Association, referred to as a tax rate of 8% if the employee has established his pension entitlement at the age of 60 years of age, and 15%, if they decide to prematurely redeem that right.

The Association pointed out that, while they understand the taxation of capital formation through savings, it fails to realize proportional taxation of insurance protection programs, such as medical and hospital care, as long as they are compensated and do not lead to the enrichment of the insured.