Which pension and life insurance policies can I declare?
Contributions to pension insurance with and without capital option and to endowment life insurance with a minimum term of twelve years can be declared as "other pension expenses". However, this only applies if the insurance term and the first premium payment began before 1 January 2005.
They will only be considered if the deductible maximum amount of 1,900 Euro (employees, pensioners) or 2,800 Euro (self-employed) has not already been exhausted by contributions to basic health and nursing care insurance.
What does the capital option mean?
With a private pension insurance with capital option, the policyholder can decide at the end of the term whether to receive the accumulated earnings as a monthly pension or as a one-off payment. An endowment life insurance offers the same protection in the event of death as term life insurance. In addition, it is also a savings contract. This distinguishes endowment life insurance from term life insurance, which only pays out if the insured person dies during the contract term. If they live longer than the agreed term, the contributions paid into the term life insurance are forfeited.
Which pension and life insurance policies can I declare?
How can I deduct contributions and pensions from life insurance?
Contributions to endowment insurance are considered pension expenses and can be deducted from tax if they are part of an old contract concluded before 2005. However, they are only taken into account if the deductible maximum amount of 1.900 Euro (employees, pensioners) or 2.800 Euro (self-employed) has not already been exhausted by contributions to basic health and nursing care insurance.
Contributions paid to an endowment or pension insurance with a capital option have only been 88 per cent deductible since 2004. If the capital option is excluded in the pension insurance, the contributions are 100 per cent deductible.
However, the total amount of pension expenses that can be claimed for tax purposes is very complicated to calculate and, above all, limited. Often, the remaining deduction allowance for the maximum amount has already been exhausted by contributions to accident and liability insurance. Contributions exceeding this cannot be claimed.
How can I deduct contributions and pensions from life insurance?
What does the Retirement Income Act mean for my life insurance?
Since the Pension Income Act in 2005, payouts from capital life insurance are generally taxable. The previous tax exemption has been largely abolished.
Tax Exceptions
Reduced taxation is possible if:
- the contract runs for at least 12 years and
- the payout is made after the age of 60 (from 2012: after the age of 62).
Then only half of the profit is taxable.
For payouts as a pension, only the statutory profit share is taxable. This depends on the age at the start of the pension. As a result, the tax burden is often lower than with a lump sum payment.
Other Types of Insurance
The following insurances are also considered life insurance for tax purposes:
- Education and dowry insurance
- Disability and accident supplementary insurance
- Accident insurance with premium refund
- Dread disease insurance (for serious illness)
Deductibility of Contributions
- Pension insurance without capital option starting before 2005 is still deductible.
- Contributions to provident, pension, widow's, orphan's, and funeral funds can also be deducted, depending on the type of payout.
- Riester contracts must be claimed separately.
- Unit-linked life insurance is not deductible.
What does the Retirement Income Act mean for my life insurance?
Where do I enter contributions to a unit-linked life insurance policy?
Endowment and pension insurance policies are only tax-advantaged if they were taken out before 2005. Contributions can generally be deducted as other insurance as pension expenses.
However, a tax deduction usually fails because the possible maximum deduction amount of 1.900 Euro or 2.800 Euro is exhausted with contributions to health and nursing care insurance, unemployment insurance, as well as private accident and liability insurance.
Unit-linked pension insurance is not tax-deductible, and the contributions cannot be claimed as special expenses under pension expenses.
Support is provided for unit-linked life insurance only as certified contracts for the Riester or Rürup pension. The contributions must then be separately documented in the tax return in the Riester pension section or in the basic pension (Rürup pension) section. For a Riester pension, contributions of up to 2.100 Euro per year are tax-advantaged as special expenses.
Where do I enter contributions to a unit-linked life insurance policy?
