Pension insurance contributions as anticipated income-related expenses

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*by Johannes Fiala, Lawyer (Munich), MBA Financial Services (Univ.Wales), MM (Univ.), Certified Financial and Investment Advisor (A.F.A.), EC Expert (C.I.F.E.), Lecturer (Univ. of Cooperative Education), Banker (www.fiala.de)
Double? Taxation of pension income? The Federal Constitutional Court has obliged the legislature to standardise the taxation of civil servants’ pensions and pensions from statutory pension insurance.
With the coming into force of the Retirement Income Act, there will be a gradual transition to uniform, deferred taxation. From 2040, all pensions and other retirement income will be 100% taxable.
Cause: Only partial deductibility of contributions: Mirroring this, regrettably, expenses for statutory or private old-age provision are also only tax-exempt in stages. At present these expenditures, the ?contributions to the age precaution?, are considered only partially tax-reducing as so-called special contributions.
Keep receipts: Who already before coming into force of the age income law – thus before the year 2005 – contributions to the age precaution paid, might be likewise disadvantaged, because also these contributions were often put ?as special expenditures? only partly tax-free. This point can offer with beginning of the pension payment with up to 100% tax liability presumably likewise cause for arguments with the tax authorities. Therefore, the corresponding receipts should be kept carefully.
Argumentation: If it is already certain for the contributor today that the pensions must be taxed at 100%, then it is obviously a question of ?pre-caused income-related expenses?, § 9 EStG.
It follows from the systematics of the law that special expenses can only be expenses that are neither business expenses nor income-related expenses. Two proceedings are currently pending before the Cologne (Case No. 12 K 2253/06) and Hanover (Case No. 16 K 10255/05) tax courts on this subject.
Appeal: Taxpayers can appeal by filing a notice of appeal. A complaint will probably not be necessary, because the Federal Minister of Finance announced with letter of 30.06.2006 (file reference: Az: IV A 7 – S 0622 – 20/06, in: DStR 2006, p. 1371) that with objections, which are inserted exclusively because of the Nichtabziehbarkeit of pension insurance contributions as anticipated Werbungskosten, an amicable procedure silence for expediency reasons (§ 363 exp. 2 p. 1 AO) can be considered.
A decree of the OFD Koblenz dated 10.07.2006 also opens up the possibility of raising objections regarding the non-deductibility of pension insurance contributions as anticipated income-related expenses in the case of income within the meaning of § 22 no. 1 EStG with the consent of the objector for reasons of expediency in accordance with § 22 no. 1 EStG. § 363 para. 2 sentence 1 AO to be suspended.
Sample objection: Several sample formulations can be found on the Internet, for example athttp://www.stbverband-berlin-bb.de/archiv/Mustereinspruch_Rentenbesteuerung/.

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Dr. Johannes Fiala Dr. Johannes Fiala

Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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