Taxation of German pensions
General information for all recipients of a German pension
On January 1, 2005 a new law on taxation of old age pensions (Alterseinkünftegesetz) entered into force. According to this law, pension from the statutory pension insurance (and other forms of pensions) shall be gradually carried over to full taxation. This process will stretch from 2005 until 2040. Depending on the year of the first pension commencement, the tax and revenue office determines the so-called taxation rate of the pension and the fixed tax exempt amount. The taxation rate identifies the taxable percentage of your pension.
In case of a pension commencement in 2005 or before the tax office determines a fixed tax-exempt amount considering a taxation rate of 50%. The tax-exempt amount is in principle accounted for every year and during the whole retention of the pension payment.
For every new pensioner age group from 2006 onwards the taxation rate rises by two percentage points, and for every pensioner age group from 2021 it rises by one percentage point. Thus, the tax-exempt amount resulting from this declines gradually for every new pensioner age group. For pensioner age groups from the year 2040 100 % of the pension form the statutory pension insurance will be subject to taxation.
Special regulations for recipients of compensation payments
For more information on special regulations regarding the taxation of social security pensions paid by German statutory pension insurance scheme on the basis of contribution periods for employment in a ghetto, please read our information here:
Whom to contact for further questions?
If you have further questions regarding taxation of your pension in Germany, you have the option to either contact the competent tax authority in Germany or a tax accountant with knowledge in international taxation regulations. Due to the complexity of this matter, the German Embassy is not in a position to offer further information or counseling.
The Finanzamt Neubrandenburg (tax office specialized for pensions paid to pensioners living abroad) can be reached as follows:
P.O. Box 11 01 64
17041 Neubrandenburg, Germany
telephone: 01149-395-44222 47000
fax: 01149-395-380 1059