Are pensions possibly taxed excessively high?
The Federal Fiscal Court should decide on this.
The background to the dispute.
Dispute over pension taxation: when can a decision be expected?
Are
millions of retirees
paying too much taxes?
There is
at least a dispute
about a
possible double taxation of the pension
.
The
Federal
Fiscal
Court is to
decide
in two pending proceedings
(BFH, XR 20/19 and XR 33/19), as reported by the portal
wiwo.de
(as of March 30)
.
On May 19, the BFH wanted to negotiate orally for the first time in both proceedings, and a decision is expected to be announced at a separate date at the end of May *.
Possible double taxation of the pension: who is affected by the dispute?
The so-called
downstream pension taxation has been in force
since 2005
. According to the German Pension Insurance, this means that everything you spend on retirement provision is increasingly tax-free. For this, however, your pension income will be taxed later. Actually is the advantage, they say this, click
wiwo.de
though
,
because at the age tax rates are generally lower than during working life. However, the report from
Wirtschaftswoche continues
, transitional rules had to be laid down during the changeover in this country, "because in 2005 there were both millions of pensioners (who had not yet paid their contributions tax-free according to these rules) and millions of pensioners (who had also been taxed according to the old rules up to that point)" . That is why a gradual transition has been established. Pension contributions can therefore only be paid in fully tax-free from 2025. Pensioners, on the other hand, only have to pay full tax on their pension when they retire from 2040. Whether these
transitional
rules are fair is a
matter of criticism
according to controversial, there is also the question of constitutionality.
In essence, it is about whether retirees have to pay too much taxes.
"But this applies above all to future retirees, with a high point for the retiree year starting in 2040, these people are now in their late forties."
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When is a pension considered too taxed at all?
There are various assumptions and interpretations here, according to the reports - and that is exactly part of the dispute.
According to the current definition
, as
Wirtschaftswoche describes
it in detail, there is double taxation of the pension if the sum of the tax-free pensions in old age is lower than the sum of pension contributions paid during working life, which the tax office had not taken into account to reduce tax. In other words: “Every pensioner must later receive at least as much tax-free pension as he has paid in contributions from his taxed income. If this is not the case, a euro that has already been taxed as a contribution will be taxed again on the pension - double taxation, ”explains
wiwo.de
.
This definition is also based on a BFH ruling from 2015.
According
to
Wirtschaftswoche
, the
problem with this definition
is
: "It must be determined how the tax-free pension amount and the taxable pension contribution amount are calculated," as the report goes on to say.
The total pension can only be determined for an assumed lifetime.
After all, it is not clear in advance how long each individual pensioner will live and receive a pension.
"And when calculating the sums themselves, different assumptions can be made that influence the result," says
wiwo.de.
Also read
: This is what you should have done before you retire - urgent advice from experts
Dispute over double taxation of pensions - different calculation models
The Mannheim tax consultant Heinrich Braun, together with the Saarbrücken financial mathematician Klaus Schindler, had chosen a different approach, as the
Wirtschaftswoche
describes.
In an interview with
fr.de *
, Klaus Schindler, who developed a corresponding formula, explained using an example: “With a
retirement age in
2020 and 35 years of contribution period,
i.e. contributions beginning in
1985, the taxable portion of the total pension contributions is around 40%.
In contrast, only 20% of the pension income is tax-free in the payment phase.
Instead, the amount should be 40%.
Conversely, this means that there is double taxation. "
Schindler also stated in the interview: “According to our calculation, double taxation applies at least to pensioners who retire from 2005 onwards.
At this point in time it is still relatively low, but continues to rise rapidly and in the retirement years 2022 - 2023 it reaches its maximum rate of 20 to 23% and, unjustifiably, the higher the greater the number of contribution years. "Only from the year In 2070, the first senior citizens would no longer be taxed twice, according to Schindler.
"For me as a financial mathematician, this construction is adventurous."
You can also read:
What you should definitely not forget when filing your 2020 tax return
Key judgments expected - what are the financial consequences?
The currently much-cited calculations would, at least, writes
wiwo.de
, “are based on a different definition of double taxation”: “They rely solely on the percentages of the tax-free portion of the pension and the taxed portion of the pension contributions,” it says Report: "A double taxation exists, if the tax-exempt portion of the pension income is lower than the taxed portion of the pension contributions'." That makes arithmetic easier, because the lifespan, for example, does not matter. "It is not the common definition," it said on
wiwo.de
. "Whether and how the Federal Fiscal Court will decide here is open."
The experts are now looking forward to the BFH's decision.
And not just them: Regardless of the direction in which the judgments turn out - they would have "high
financial consequences for millions of Germans
", reports
wiwo.de.
“It may not even be the decision in individual cases that is decisive, but rather the principles set up in the process, which can then also be transferred to other cases.”
(Ahu) Merkur.de and fr.de are offers from IPPEN.MEDIA.
Sources: www.wiwo.de; fr.de; www.deutsche-rentenversicherung.de
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List of rubric lists: © Ralf Hirschberger / dpa