(2022) How is my pension from an occupational pension scheme taxed?

Pensions from occupational pension schemes are part of the so-called basic provision, like pensions from the statutory pension insurance. This means:

• Taxation is based on the so-called taxable portion. This is a certain percentage legally fixed for the year the pension begins.
• This taxable portion depends on the year the pension begins. It starts at 50 per cent in 2005 and increases by 2 percentage points for each new pensioner cohort from 2006 to 2020, and by 1 percentage point from 2021 to 2040.
• The taxable portion is applied only in the year the pension begins and in the second year of receiving the pension.
• In the second year of receiving the pension, the remaining amount after deducting the taxable portion is the personal pension allowance, which remains tax-free for life.
• From the third year onwards, the full pension amount is taxable after deducting the personal pension allowance and the standard allowance for income-related expenses of 102 Euro.
• Since the pension allowance remains unchanged for life, any pension increase is fully taxable.

The tax office automatically deducts a standard allowance for income-related expenses of 102 Euro without further proof. If you have higher expenses, you should declare them in your tax return to reduce your taxable income.

You can declare, for example, tax consultancy costs (for form R), pension advice, or a lawyer if they support you with pension matters. However, you must prove these higher expenses.