GERMANY - The German parliament has passed a government bill which will ensure that discrimination against migrant workers who receive Riester subsidies is eliminated and that employee share-ownership becomes more attractive.

The European Court of Justice (ECJ) had criticised Germany last year over the conditions under which the state-subsidised third pillar pension provision, the so-called Riester-Rente, was granted. (See earlier IPE story: German BMF accepts ECJ ruling on Riester)

Under the new law, these subsidies will no longer depend on a person living in Germany and therefore having to pay taxes in Germany, but on whether or not they work in the country where the Riester-Rente is linked to receiving a German state pension or a German salary.

Employees of German companies, as well as their spouses, would until now have lost the state subsidy if they moved outside of Germany. However, the ECJ had earlier argued this was an infringement on the freedom of movement within the EU.

Part of the legal package, including various tax changes, was an alteration to the law on employees owning shares in the company they work in.

A law which came into effect last year allows employees to receive up to €360 per year in tax-free company shares and free of social insurance contributions.

This tax exemption is now extended to parts of the salary which are being converted to company shares.

The German pension fund association aba fears this step could instead lead individuals to cease contributions towards their retirement provision. (See earlier IPE story: Aba dismisses idea for fund-based pensions as counterproductive)

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