Up until 31-12-06 there was a reduction of 40% which was applied to the amounts contributed when they were recovered in the form of capital upon reaching retirement age.  Amounts contributed from 01-01-2007, however, won't have this deduction.  The purpose of this measure is to encourage more people to opt to take their benefits in the form of income.

For persons aged 52 and over, under the law up until 31-12-06, the amount increased by €1,250 per annum up to a maximum of €24,250 for persons aged 65 and over.

Persons who are better off since the change: those in the 50- to 55-year-old age bracket, who'll be able to contribute up to €12,500; and persons in a situation of severe dependency or great dependency, who'll have the option to draw the benefit.

Persons who are worse off: savers over 56 years of age with the ability to pay in large amounts of capital; and those who've taken out several plans, because the reduction limit will be combined for contributions to pension plans, mutual benefit societies, insured welfare plans, social welfare plans and dependency insurance policies.

One of the novel features of the act which came into force on 01 January 2007 is that lettings to young persons between 18 and 35 years of age are now tax-exempt.  Moreover, if the tenants aren't in this age bracket, the landperson will only have to declare 50% of the income. 

It's more beneficial to let a flat for living in than to let it as an office or shop, because in the latter case the landperson will have to pay tax on the whole income; he or she won't get all of the rent in because the lessee will withhold 15% from him or her; and furthermore, he or she will have to send in quarterly VAT returns.

Costs of improving the property: up until 31-12-06 it was only possible to deduct costs, including financial ones, up to the level of the income received.  From 2007 onwards, however, it is permissible for these costs to exceed the income, and even to produce a negative net result.  Hence, the costs may be offset against other current income or against letting income as far back as four tax periods ago.

In addition to pension plans, mutual benefit societies and insured welfare plans, it's now possible for entrepreneurs and workers to contribute to company social welfare plans, which are a type of insurance policy; and the base may also be reduced by the premiums paid to private insurance policies which cover exclusively the risk of severe dependency or great dependency.

Individual regular savings plans are another social welfare product.  These are contracts with insurance entities under which a maximum of €8,000/year may be contributed without the base's being reduced; the maximum total contributions may be as much as €240,000 and the benefit may only be taken as an insured income for life.

Dependency insurance policies: these work like a life assurance policy, covering exclusively "great dependency": help with performing the basic activities of daily life; loss of mental or physical independence; or permanent attendance by another person.