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Billions in dispute over double taxation of pensions: who is affected and how much money is involved


Two fundamental judgments in May will clarify whether an entire generation of pensioners has to pay too many taxes. You can read all the important questions and answers about the billion dollar dispute here.

Two fundamental judgments in May will clarify whether an entire generation of pensioners has to pay too many taxes.

You can read all the important questions and answers about the billion dollar dispute here.

  • Are pensions possibly taxed excessively?


    Federal Fiscal Court

    will take two landmark decisions in May.

  • Double taxation

    is an emotional and at the same time very complex topic.

    Whether the tax authorities really get too much from pensioners is also a matter of interpretation.

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Munich - Do you pay too much taxes in old age?

This question worries millions of Germans.

In May, the Federal Fiscal Court (BFH) will also deal with this question.

In two proceedings, fundamental judgments are to settle the long simmering dispute over possible double taxation of pensions.

The judgments, which according to the BFH are expected to be announced at the end of May, are likely to have far-reaching consequences.

For prospective pensioners it is about several thousand euros, for the state even billions - regardless of how the BFH decides in the end.

The most important questions and answers:

Double taxation of pensions: what is the dispute actually about?

Insured persons (and usually their employers as well) pay contributions to the statutory pension in order to build up entitlements for old age.

The applicable tax rules were fundamentally changed in 2005.

Since then, tax is only due when the pension is paid out.

This pays off for future retirees, after all, tax rates are usually low in old age.

The change in the tax rules, however, required a transitional arrangement, after all, in 2005 there were millions of pensioners and pensioners who were taxed according to the old rules until then.

The transition should work in stages: Pension contributions can only be paid in fully tax-free from 2025.

Pensioners only have to pay full tax on their pension when they retire from 2040 onwards.

The dispute over double taxation is essentially about whether this transitional regulation is fair - i.e. whether today 40 to 50-year-olds who will retire by 2040 have to pay too much tax.

When is a pension considered double and therefore taxed too high?

There is no clear definition.

According to


, according to a BFH ruling from 2015, a pension is considered to be taxed twice if the sum of the tax-exempt 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, an already taxed contribution will be taxed again when it is paid out - so there is double taxation .

The problem - and thus also the cause of the whole tax dispute - lies in the calculation of the tax-free pension amount and the taxable contribution amount.

According to the Mannheim tax advisor Heinrich Braun and the Saarbrücken financial mathematician Klaus Schindler, double taxation exists “if the tax-exempt portion of the pension income is less than the taxed portion of the pension contributions”.

Sounds similar, but it's not.

The service life, for example, does not matter in this approach.

But it is just not the common definition.

How the Federal Fiscal Court positions itself here is considered open.

How much money does double taxation involve for future pensioners?

Calculations by the financial mathematician Werner Siepe showed years ago that double taxation can reach up to 20,000 euros over the entire retirement period.

According to


, Siepe applied the common (re) definition of double taxation and strict calculation rules in its calculations in favor of tax-paying pensioners.

The two proceedings at the Federal Fiscal Court are about a lot - and the future of an entire generation of pensioners.

Privately insured persons, civil servants and co .: Who is affected by double taxation of the pension?

In purely mathematical terms, people who retired around 2015 could be affected by double taxation.

Egmont Kulosa, a judge at the Federal Fiscal Court, wrote in a specialist article some time ago: "You don't need any complicated mathematical exercises to prove double taxation for members of today's middle generation who will be drawing their pensions around 2040." all pensioners who retired by 2015 can still be excluded from double taxation.

But then it becomes critical.

But what role does the type of pension insurance play?

The tax rules, which were updated in 2005, also apply to pensions from pension funds, for example from doctors or lawyers.

In the case of private pension insurance, however, different tax rules apply, but here too there are some indications that the burden is too high.

Only officials can breathe a sigh of relief.

The problem does not arise here because no contributions at all have to be paid for the later pension.

It is financed by the state alone.

What can I do in the event of double taxation of my pension?

You can only take action against double taxation after you retire. Contributors who suspect excessive taxation have their hands tied. Affected pensioners can appeal against tax assessments that are still open. According to


, tax offices are currently often refusing to suspend objection proceedings because of the pending BFH proceedings. Those affected would have to take action themselves and possibly even complain. For all future pensioners it is therefore important to wait and hope for a positive BFH judgment at the end of May. A small ray of hope: The President of the German Pension Insurance recently raised hope of a pension increase in the coming year after the corona crisis in 2021 caused the pension increase in the West to fail.

Source: merkur

All news articles on 2021-04-07

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