What does the opening clause mean?

What does the opening clause mean?

The opening clause relates to deferred taxation and aims to prevent unfair over-taxation. Self-employed individuals who have voluntarily paid higher contributions to an occupational pension scheme over several years can benefit from the opening clause if their contributions exceeded the contribution assessment limit of the statutory pension insurance.

Contribution assessment limit and voluntary payments

The contribution assessment limit is recalculated annually and determines the income up to which pension insurance contributions are levied. For income above this limit, contributions are usually not payable unless voluntary payments are made – for example, by self-employed individuals.

Tax issues

A self-employed person has voluntarily paid higher contributions from their taxed income and receives a higher pension in retirement. Without the opening clause, this pension would have to be taxed at the full tax rate (in 2024: 83%), which could lead to excessive taxation.

Using the opening clause

To avoid this, the pensioner can have the pension divided into a voluntary and a statutory part, provided they paid the higher contributions at least ten years before 31.12.2004. The portion of the pension based on the increased contributions is then taxed at the more favourable income share rate.

Example

A pensioner has been receiving a pension of 1.500 Euro per month since the age of 65. If they can prove that 30% of the pension is based on increased contributions, this division is made:

• 70% of the pension (1.050 Euro) is taxed normally.
• 30% of the pension (450 Euro) is taxed at an income share rate of 18%.

Result: Only 8.280 Euro need to be taxed, instead of 10.440 Euro without the opening clause.

Calculation of the income share rate

The income share rate depends on the age of the pensioner at the start of the pension payments:

• 64 years: 19%
• 65-66 years: 18%
• 67 years: 17%

Tip for using the opening clause

Those affected should ensure when applying for a pension that the part of the pension based on the increased contributions is correctly divided. The certificate from the pension insurance provider contains all the necessary information for the tax office.