Which pension expenses can I deduct in the tax return?

Pension expenses are expenditures with which you provide for your future. Pension expenses are divided into health and nursing care insurance, retirement provision, and other insurance.

Retirement pension expenses mainly include contributions to the statutory pension insurance, a Riester pension, or a private Rürup pension (funded pension scheme). Contributions to occupational pension schemes are also included if they provide benefits comparable to statutory pension insurance. This mainly applies to employees and self-employed members of professions with chambers, such as doctors, dentists, veterinarians, pharmacists, tax consultants, lawyers, auditors, notaries, architects, engineers.

There is a separate maximum amount for payments into a Riester contract. Therefore, you can claim contributions to the specially subsidised Riester pension separately. For this, there is the "Anlage AV", in which the Riester contributions must be entered. This must then be submitted to the tax office together with the provider's certificate.

Contributions to statutory and private basic health insurance as well as statutory nursing care insurance (i.e. social nursing care insurance and private compulsory nursing care insurance) are deductible as special expenses in their actual amount and without limit.

Other pension expenses mainly include contributions to unemployment insurance, occupational disability, accident, and liability insurance, term life insurance, private health insurance (beyond basic cover), and private nursing care insurance. Capital life insurance and pension insurance with a capital option (considered at 88%) as well as pension insurance without a capital option concluded before 2005 are also included here.

Insurance that does not serve future provision is not deductible as pension expenses. This includes, for example, property insurance such as household, legal protection, or comprehensive car insurance.

Also not deductible as pension expenses are contributions to direct insurance, a pension fund, or a pension scheme if they are tax-advantaged. Insurance amounts and other pension expenses do not fall under the "special expenses allowance" because they are not unlimited deductible special expenses.

The maximum pension amount is usually already exhausted by health and nursing care insurance and retirement pension expenses. Therefore, other pension expenses (see above) often have no tax effect.

For this reason, it is advisable to claim occupational insurance not covered by the employer as income-related expenses. In practice, a deduction in Anlage N (section "Employees > Income-related expenses") is mainly possible for professional liability insurance and professional legal protection insurance.

As accident insurance usually covers both private and occupational risks, the contributions are partially deductible as income-related expenses and partially as special expenses. Claim 50% of the contributions as income-related expenses and 50% as special expenses ("other insurance"). However, if you have a hazardous occupation and the occupational risk share is greater than 50%, you should have this confirmed by the insurance company. Claim the certified share as income-related expenses and attach the certificate to your tax return.

(2023): Which pension expenses can I deduct in the tax return?

Which health and nursing insurance contributions can I claim?

You can enter your full health and nursing insurance contributions for basic cover as special expenses in your tax return. The tax office deducts a flat rate of four per cent for sickness benefit from the contributions paid to statutory health insurance.

For those privately insured: Costs for health and nursing insurance are only recognised up to the basic contribution of the private health insurance. Optional benefits, such as treatment by the head physician or a two-bed room in hospital, are considered under "other insurance contributions" if there is still room within the deductible maximum amount.

If you have a more comprehensive contract, the private health insurance will determine the exact proportion of basic cover. If your health insurance contributions do not exceed the maximum amount of 1.900 Euro (2.800 Euro for self-employed), you can claim contributions for other insurances. Favourable contributions include those for unemployment insurance, additional health or nursing insurance, private disability insurance, accident or liability insurance, or term life insurance. Endowment and pension insurance policies can be considered as special expenses if the policies were taken out before 2005.

A married couple pays a total of 4.600 Euro in contributions for health and nursing insurance in a year without sickness benefit. This means the contributions exceed the joint maximum amount of 3.800 Euro (twice 1.900 Euro). Nevertheless, they are deductible as special expenses to this extent, but further insurance contributions, such as accident or motor vehicle liability insurance, can no longer be deducted.

Since the general contribution rate for those with statutory insurance covers sickness benefit, contributions are reduced by 4% on a flat-rate basis. The reduction only applies if there is an entitlement to sickness benefit in the event of illness. The reduction is made by the tax office. Until 2014, the reduction did not apply to the income-independent additional contribution. Since 2015, the following legal situation applies: The newly designed fund-specific income-dependent additional contribution is now considered an integral part of the health insurance contribution and is therefore included in the assessment basis for calculating the four per cent reduction amount. The contribution is no longer differentiated into a basic contribution and the additional contribution.

(2023): Which health and nursing insurance contributions can I claim?

Higher deduction for insurance premiums from 2010

Since 2010, you can enter the full health and nursing insurance contributions for basic cover as special expenses in your tax return. The tax office deducts only four per cent from the contributions paid to statutory health insurance.

However, for privately insured individuals: You can only fully deduct the health and nursing insurance contribution if you pay the basic tariff of private health insurance. Policyholders with a different private health insurance tariff can deduct the contributions up to the amount of the "basic cover" for tax purposes. In this case, the private health insurance company determines the exact share. However, these contributions are only recognised for tax reduction if the deductible maximum amount for "other insurance" has not yet been exhausted.

For employees, civil servants, pensioners and their partners, this is 1.900 Euro, for self-employed persons 2.800 Euro.

An employee earns 1.500 Euro gross per month. He pays around 132 Euro per month, 1.584 Euro per year, for his statutory health and nursing insurance. The tax office deducts four per cent from this amount. Thus, it recognises 1.521 Euro as special expenses. The taxpayer has therefore not yet reached his maximum amount of 1.900 Euro.

He can now also claim expenses for unemployment, liability and other insurance up to the maximum amount of 1.900 Euro. To do this, he deducts the 1.531 Euro. For the employee, this means: He can enter a further 379 Euro in insurance contributions in the income tax return.

(2023): Higher deduction for insurance premiums from 2010

How are children's health insurance contributions taken into account?

Claim contributions to your child's health and nursing care insurance on your tax return as follows:

(1) You are entitled to child benefit, and you are the policyholder
The contributions to your child's health and nursing care insurance are deductible as special expenses for you. Enter the contributions for basic cover in the "Anlage Kind" (line 31). Contributions for optional benefits, foreign health insurance, etc. are deductible for you under "other insurance" and should be entered in the "Anlage Kind" (line 37).

(2) You are entitled to child benefit, and the child is the policyholder
A special legal regulation applies here: If you pay the health insurance contributions for a dependent child for whom you are entitled to child benefit, you can deduct the contributions as special expenses (§ 10 para. 1 no. 3 sentence 2 EStG). Enter the contributions paid in the "Anlage Kind" (line 31). Contributions for optional benefits, foreign health insurance, etc. are only deductible as special expenses for the policyholder - i.e. the child - under "other insurance" and must therefore be entered in their tax return in the "Anlage Vorsorgeaufwand" (line 36). These contribution shares cannot be deducted by the parents.

Note: According to a recent ruling by the Federal Fiscal Court, the tax deduction requires that the parents have actually paid or reimbursed the contributions to the child (BFH ruling of 13.3.2018, X R 25/15). However, this ruling is not recognised by the tax authorities, and a legal amendment has since provided clarification. The contributions to the child's (basic) health and nursing care insurance are deductible as special expenses, regardless of whether the parents financially cover the child's contributions as part of their maintenance obligation through cash or in-kind support. It is also irrelevant whether the child has their own income. However, the child must be entitled to maintenance. (§ 10 para. 1 no. 3 sentences 2 and 3 EStG, amended by the "Act on Further Tax Promotion of Electromobility and Amendment of Other Tax Regulations" of 12.12.2019).

(3) You are not entitled to child benefit, and you are the policyholder
If the child is insured with you, you can deduct the contributions you have paid as your special expenses (§ 10 para. 1 no. 3 EStG). Claim the expenses in the "Anlage Vorsorgeaufwand" (line 40 ff.).

(4) You are not entitled to child benefit, and the child is the policyholder
If the child is the policyholder and you pay the insurance contributions, you cannot deduct the expenses as special expenses. The above-mentioned special regulation does not apply here. However, you can claim the contributions paid for basic cover as extraordinary expenses under § 33a para. 1 EStG and enter them in the "Anlage Unterhalt". In general, maintenance payments are deductible up to a maximum amount of 10,908 Euro (2023). In this case, however, the maximum amount is increased by the health and nursing care insurance contributions paid. A reasonable burden is not taken into account.

(2023): How are children's health insurance contributions taken into account?

How is my contribution to statutory health insurance calculated?

The contribution rates in statutory health insurance (GKV) are based on the gross monthly salary. Part of the insurance contribution is paid by the employer, while the employee pays the other part. Non-working family members (spouse or children) are co-insured free of charge.

There are different contribution rates in statutory health insurance:

The general contribution rate: This applies to those insured with entitlement to sick pay in the event of prolonged illness, such as employees. The general contribution rate also applies to pensioners, even if they are not entitled to sick pay.

The reduced contribution rate: This applies if there is no entitlement to sick pay. This affects, for example, students or self-employed persons.

Voluntarily insured persons can acquire an entitlement to sick pay from the seventh week, like those with statutory insurance, through the general insurance contribution. Illness periods before the seventh week are still not covered for voluntarily insured persons and must be secured privately or through an additional optional tariff from the health insurance company. For most insured persons, only the general contribution rate is relevant. The contribution rate is given as a percentage of the total gross income up to the contribution assessment limit.

Until 2014, the general contribution rate was 15.5 percent. Of this, 7.3 percent was paid by the employer and 8.2 percent by the employee. This meant an insurance contribution of 246 Euro per month for an employee with a gross salary of 3.000 Euro. Since 2015, the general contribution rate has been fixed at 14.6 percent, with the employer and employee each paying half. In addition, the employee must pay the new income-dependent additional contribution, which varies depending on the health insurance company. The average additional contribution rate in 2023 was 1.6%.

Contributions do increase proportionally with income, but not indefinitely. For high earners, there is a contribution assessment limit. In 2023, this is 58.850 Euro per year or 4.987,50 Euro per month and applies equally in both the old and new federal states. Wages and salaries above the contribution assessment limit are no longer subject to contributions. The legislator wants to create an incentive for high earners to take out statutory health insurance. This is intended to curb the decline in membership of statutory health insurance funds and ensure their financing. The contribution assessment limit is adjusted annually to the general wage and salary development.

Since the general contribution rate for those with statutory insurance covers sick pay, contributions are reduced by 4% on a flat-rate basis. The reduction only applies if there is an entitlement to sick pay in the event of illness. The reduction is made by the tax office.

The fund-specific income-dependent additional contribution is considered an integral part of the health insurance contribution and is therefore included in the assessment basis for determining the four percent reduction amount.

(2023): How is my contribution to statutory health insurance calculated?

Which health insurance subsidies do I need to declare?

If medical expenses or health insurance contributions are not paid from your own funds but are (partially) covered by third parties, this must be indicated in the tax return. This includes, for example, tax-free subsidies for health insurance from the employer for employees subject to social insurance (employer's contribution to health insurance). Employer subsidies for voluntarily insured employees, contributions for pensioners through statutory pension insurance, claims for health insurance subsidies for civil servants and pensioners, and contributions from the artists' social insurance must also be declared. Anyone receiving one of these subsidies must tick "Yes" on this form. A spouse who is not employed and exempt from compulsory statutory health insurance must also tick "Yes" if they are covered by family insurance through the working spouse. Part-time employees should tick "No" unless they are entitled to family insurance through their spouse.

Up to what amount are health insurance contributions deductible?

Contributions to statutory and private basic health insurance as well as statutory nursing care insurance (i.e. social nursing care insurance and private compulsory nursing care insurance) are deductible as special expenses in the actual amount and without limit. Contributions and contribution shares to private health and nursing care insurance that go beyond basic cover can generally be deducted under "other insurance", but they usually do not have an effect there because the possible deduction limit has already been exhausted.

(2023): Which health insurance subsidies do I need to declare?