(2023) What are permanent financial burdens?

Perpetual burdens are pension payments that a taxpayer makes to another person on a long-term basis and due to a legal obligation. These are regular payments whose duration, in the case of a pension payment, is linked to the lifetime of one or more persons. Perpetual burdens must be provided for at least ten years.

In contrast to pension commitments, perpetual burdens can be adjusted at any time. They are therefore variable in amount and depend on the financial circumstances of the payer and the recipient. This may be the case, for example, if the financial situation of the contracting parties changes.

Perpetual burdens can be in cash or in kind. An example of in-kind payments is the so-called "gebornene" perpetual burdens. This includes, for example, the obligation to provide meals for a person.

Abbreviated perpetual burdens can also be agreed if they end either with the death of the person or at the latest after a certain period.

Since 2008, there is no longer a tax distinction between perpetual burdens and annuities. Pension payments are now always considered "perpetual burdens". This means that the previously required calculation of the income share for life annuities can be omitted.