Steuerberaterin Petra Chr. Sabrowski

Taxation of pensions

The Retirement Income Act, which has been in force since 2005, regulates the taxation of pensions. The legislature has divided pensions into two large groups: the group of statutory pensions and the group of private pensions.

The newly starting statutory pensions will be fully subject to income tax until 2040. The taxable portion of the new pension increases in annual steps of 1-2%.

The basis for determining the tax-exempt portion is always the starting year of the pension. The tax-exempt amount that was determined once is valid for the term of the pension.

The large group of private pensions are only taxed on the so-called income share. In individual cases, full taxation may also apply. In this case, it is necessary to examine exactly which model was used to build up the pension system. The tax assessment is supported by a certificate from the pension office defining the taxable parts of the pension.

Pension recipients who do not file an income tax return are increasingly being prosecuted as tax evaders.