A life for the treasury
It’s finally here, the well-deserved pension, the much longed-for retirement, the end of all obligations, finally never having to pay taxes again. Well, not quite. The taxation of earned income is naturally followed by the taxation of pensions, or as Father State calls it, the taxation of retirement income. For many Germans, for whom there is nothing better than finally retiring and leaving their working lives behind, this is often a sobering realization. It is a widespread Misconception that there would be a tax-free pension paid out as soon as one reaches the age of 65 (soon to be 67) in Germany, the so-called statutory retirement age. This is not the case! For all pensioners and retirees applies that also on their statutory pension payments and payments from There isno tax on private pensions or company pensions. Payments from statutory pension funds and pensions are taxed progressively in line with income tax, while income from private pension plans is taxed as before at the so-called income share.
Pension taxation: what you need to know
It is important to know for all pensioners that any income is taxable even after working life. Pension benefits are treated as income accordingly and, contrary to common belief, do not enjoy a special status. The only exceptions to this rule are benefits from long-term care insurance, basic security in old age, pensions from accident insurance , war and severely disabled persons’ pensions, and reparation pensions. These continue to be tax-exempt.
The real confusion on the subject of pension taxation was caused by the change in the taxation date in the noughties. Whereas pensions were taxed up to this point on a front-loaded basis, since 2005 pensions have only been taxed on a back-loaded basis at the start of the pension.
At this point we would like to state that the topic of taxes is also of great importance for pensioners. So find out early on what you can expect and, if necessary, what you need to do. what measures you can take today to save taxes in the long term. We look forward to hearing from you.
Help with pension taxation
- Tax law advice and tax representation in Germany
- Advice on the subject of assets in Germany and the EU
- Advice on tax optimization
- Accounting and asset management
- Advice on tax returns through our the network
Pension taxation: Helpful articles
- Customers can terminate Rüruprenten and basic pensions at any time
- In the future, not even the contributions of the direct insurance are guaranteed at the beginning of the pension.
- Pension insurance contributions as anticipated income-related expenses
- Errors in advice on the tax savings model for the Rürup pension
- Will the pension fall to basic security level?
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About the author
PhD, MBA, MM
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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