The simplified model gives a general discount that covers all expenses that the taxpayer had in the year with deductible expenses such as education private pension and medical expenses for example.
Another very important point to consider is the tax regime or how much tax you will have to pay on what the money will yield.
In the regressive taxation regime, the tax rate decreases over time, starting at 35%, in up to two years (which is why it is not recommended for the short term) and reaching the lowest rate 10% for those who leave the money for over ten years.
The progressive taxation regime is the same as the Personal Income Tax table, going up to 27.5%.
When investing in PGBL, the investor will not refrain from paying the tax owed to the government but will only defer this payment until the plan is redeemed. This is called “tax deferral”.
This tax that is not paid or refunded can be used to make an investment for example.
But in the PGBL-type plan the tax is levied on the total investment while the VGBL-type tax is only levied on the plan’s income.
To calculate how much to invest in private pension in order to fully enjoy the deduction benefit add up the total of your taxable income (which are salary retirement rent income alimony received and then calculate the 12 % on top of this value.
Example: if a person has a gross taxable income of R$100,000 a year, they can deduct up to R$12,000 a year with private pension. This means that you will be able to apply in that year up to this limit in order to be able to fully deduct this amount from Income Tax.
Values such as 13th and PLR (Profit and Profit Sharing) are not included in this account as they are Income Taxed Exclusively at Source.
But if you want to invest in a pension plan above this 12% limit you can opt for VGBL to have another type of tax advantage when redeeming the plan since in VGBL only income is taxed while in PGBL the IR is levied on all the amount of the application.