When does compensation have to be taxed?

Anyone who is reduced in earning capacity as a result of damage to his or her health through the fault of others receives compensation for this, which is taxable as it replaces earned income.

On the other hand, for the reduced ability to carry out unpaid household work, he receives a tax-exempt loss of budget management. Compensation for damages due to mobbing (FG Rheinlein-Pfalz, judgement of 21.03.2017, AZ. 5 K 1594/14) or due to a violation of the Working Hours Act (ArbZG) or other occupational safety regulations (ArbSchG) is also tax-free.

The same applies to damages for pain and suffering and compensation for additional expenses, for example, due to the need for care.

Also a compensation, which becomes due because the change from the statutory to the private health insurance no longer succeeds or only with risk surcharges, remains untaxed.


from Ingeborg Fiala

courtesy of

by Schnecke, Living with Cochlear Implant & Hearing Aid (Issue No. 104, June 2019, page 10)

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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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