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?
Should contributions to foreign insurance policies also be declared in the tax return?
The consideration of insurance contributions in the German tax return extends beyond domestic insurance. Here is a summary of the relevant regulations:
- Health insurance and pensions: In addition to German insurance, contributions to foreign statutory pension insurance providers can be claimed as "pension contributions" (according to § 10 para. 2 no. 2c EStG). Contributions to "other insurance" from foreign companies may also be deductible, provided there is still room within the insurance maximum amount. However, the foreign company must be based in an EU or EEA country or have permission to operate in Germany (according to § 10 para. 2 no. 2a EStG).
- Economic connection and special expenses: In principle, social security contributions paid abroad are not deductible as special expenses if they are economically related to tax-free income. This applies if income earned abroad is tax-free in Germany and is only considered under the progression clause (according to § 10 para. 2 no. 1 EStG).
- Special regulation since 2019: Since 2019, there has been a legal regulation allowing for an improved deduction of special expenses for contributions paid in the EU/EEA to statutory pension, health, nursing care, and unemployment insurance. This is applicable if:
- the income from employment is earned in a member state of the European Union or a contracting state of the European Economic Area,
- this income is tax-free in Germany under a double taxation agreement, and
- the employment state does not allow for the tax consideration of pension expenses in the taxation of this income.
This regulation applies to various types of pension expenses (according to § 10 para. 1 EStG).
- Judgments and developments: The Federal Fiscal Court has ruled in favour of taxpayers in several judgments (BFH judgments of 27.10.2021, X R 28/20 and X R 11/20; BFH judgments of 10.11.2021, X R 13/20 and X R 14-16/20) who wanted to deduct contributions to nursing care insurance in Luxembourg and basic health insurance in the Netherlands as special expenses in Germany. This was allowed because no tax-reducing consideration occurred in the respective countries. However, it is important to note that pension expenses related to income from third countries (e.g. China, Brazil, or India) are excluded from this regulation (BFH judgment of 14.12.2022, X R 25/21).
Overall, contributions to foreign insurance can be considered in the German tax return, provided certain conditions are met.
Note: It is advisable to inform yourself about the current regulations and judgments or to seek professional tax advice if necessary.
(2023): Should contributions to foreign insurance policies also be declared in the tax return?
