The possible double taxation of pensions could have far-reaching consequences for the federal budget, but the federal government is turning a blind eye, warns FDP financial expert Markus Herbrand.
Munich - The FDP member of the Bundestag and financial expert Markus Herbrand has asked retirees in view of the dispute over possible double taxation to examine their own claims and, if necessary, take action.
Until the final legal clarification, there will probably be "no accommodation or even an automatic transfer back," said Herbrand in an interview with
Merkur.de
.
Therefore, “pensioners should first object to their tax assessment and have their documents checked by experts,” said Herbrand.
Merkur.de
spoke to the auditor and tax advisor about the proceedings before the Federal Fiscal Court, the prospects for success and the possible consequences for the federal budget.
Mr Herbrand, many retirees may have paid too much taxes in recent years. What actually went wrong there?
The red and green Retirement Income Act of 2005, knitted with a hot needle, was the result of a court ruling by the Federal Constitutional Court at the time. The court emphasized at the time that the legislature had to ensure that there was no so-called “double taxation”. The law now evidently does not do justice to this claim.
And although, due to the lack of transparency in the pension and tax assessments, hardly anyone can see whether he or she has received too much, the burden of proof for double taxation still lies with the pensioners concerned. Hardly anyone will still have all the relevant documents from their entire working life available to provide evidence - not to mention an objective assessment of this highly complex tax problem. That is why we are calling for the burden of proof to be reversed and for more transparency. We also want to enable monthly advance payments to be made in the future, so that later no one is literally overwhelmed by the annual tax burden.
In the meantime, the question of the possible double taxation of pensioners lies with the Federal Finance Court in Munich. Two model cases are being negotiated there. How do you assess the prospects
?
The fact that the aforementioned sample cases were admitted to the hearing clearly shows that there is an initial suspicion of unlawful double taxation.
In this respect, there is also a good possibility that the plaintiff's arguments will be followed in the two sample cases.
As a result, I expect the Federal Fiscal Court to refer the matter to the Federal Constitutional Court.
How many pensioners would be affected by the judgment?
Indirectly, basically all almost 22 million pensioners, since - depending on how the judgment turns out - numerous pensioners will take a close look at their tax and pension notifications and seek advice from tax and pension experts. A prediction of the group of people directly affected is pure speculation in view of the individual employment and pension biographies.
Unfortunately, the federal government and the financial administration are blocking any attempt to obtain realistic figures or estimates of the number of people affected.
The focus here is on concealment and on time as the factor that solves the problem on its own.
To date, 142,000 proceedings are pending against double taxation.
If this trend continues, we can quickly talk about six- or even seven-digit case numbers of people who want to see their tax burden objectively and in detail.
Billionaire dispute over double taxation: "Pensioners should object"
What do you recommend to pensioners: Should they join the lawsuit or - in the case of a corresponding BFH ruling - will the corresponding amount be automatically transferred back by the tax offices
?
The BFH ruling will of course have a signal effect. Should the Federal Constitutional Court ultimately confirm the suspicion of double taxation, Parliament must take action and develop a new pension taxation. This process will take years rather than months. In my opinion, at least until the legal clarification has been completed, there will be no accommodation or even an automatic remittance by the tax offices. Pensioners should therefore first object to their tax assessment and have their documents checked by experts. If the initial suspicion is confirmed here, a connection to the various proceedings is certainly a good idea to secure legal claims in the long term.
A ruling by the BFH can be expected in the next few weeks. Should the five judges of the Xth Senate agree with the plaintiffs: What consequences would such a judgment have for the federal budget?
Since it cannot be assumed that the Federal Government will fundamentally change its view because of the BFH ruling and will then certainly wait for the Constitutional Court ruling, I do not believe that this will have any direct impact on the budget.
The prudent businessman takes such obvious risks into account.
And that is the terrifying thing: nobody knows what consequences would result from a corresponding BFH judgment!
The federal government refuses to provide information on those affected and emphasizes that there are no studies or simulation games that would show the effects of double taxation on the federal budget.
So here you don't even drive by sight, but actually completely blind into the thickest fog.
As the Federal Minister of Finance and candidate for Chancellor of a party that even has “social” in its name, Olaf Scholz should quickly get an idea of the avalanche that may be rolling towards him and all of us.
Possible double taxation of pensions: "Federal government and financial administration rely on concealment"
Markus Herbrand, Member of the Bundestag (FDP)
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Markus Herbrand: The FDP finance expert and auditor has accused the federal government of “concealing” the possible double taxation of pensions.
© Ralph Sondermann
Where could the corresponding amount be?
In view of the numbers mentioned and the millions of retirees in our country, we are sure to quickly talk about billions in the event of a corresponding court judgment.
The question then arises as to whether, and if so, to what extent, old tax cases can still be corrected.
In the lower, middle or upper billion range?
Serious information is not possible.
If even the federal government does not know or reveal these figures, I hope you will understand that I do not want to participate in such speculations.
It is up to the federal government to finally show its colors and map all risks transparently.
Has the Federal Minister of Finance taken appropriate precautions here?
Olaf Scholz rarely takes precautions, but prefers to rely on the creditworthiness of our country and the cornucopia of taxpayers.
Unfortunately, he has not left this wrong path with the double taxation of pensions.
Billionaire dispute over double taxation: Far-reaching consequences for the federal budget
Should there be a corresponding reimbursement or burden on the budget, does the federal government have to save elsewhere or - in any case, increase in new borrowing significantly?
If our budget is affected by repayments and falling income, either new debts must be incurred, additional income generated through higher taxes or savings in other items of expenditure.
New debts are likely to be difficult, also in view of the fact that, in my opinion, the debt brake of the Basic Law must be adhered to again as soon as possible.
Tax increases are pure poison that endanger the economic upswing that is urgently needed now.
There is still potential for savings, for example with subsidies.
I look forward to hearing the proposals from the federal government when the time comes.
It shows: dubious budget policy is always punished in the long run.
List of rubric lists: © Frank Hoermann / SVEN SIMON via www.imago-images.de