Since the change in the taxation of retirement income on 1 January 2005, more pensioners are required to (re)submit an income tax return. Previously, the tax authorities were unable to verify whether pensioners were fulfilling this obligation. The introduction of the tax identification number now makes this verification easier for the tax authorities. All pension insurance providers, benefit institutions and private insurance companies are now required to inform the Deutsche Rentenversicherung Bund of the amount, recipient, and start date (!) of the benefits they pay.
The identification number assigned to you must be communicated to your pension provider. Once it is on file there, the notification to the Deutsche Rentenversicherung Bund is created; this in turn collects all notifications issued under your identification number and forwards them to the Federal Central Tax Office (Bundeszentralamt für Steuern).
In the event of a filing obligation, the tax office will request you to submit your income tax return and may impose a late filing surcharge (10% of the tax assessed) for late submission. In addition, failure to file may result in administrative penalty or criminal tax proceedings. If you act before being prompted - that is, if you declare your pension income retrospectively - the filing acts as a penalty-free voluntary disclosure, provided the resulting tax is also paid immediately.
Old-age pension
The year in which the pension began is decisive for calculating the taxable proportion of the pension, for example:
- for pensions commencing up to and including 2005, 50% of the gross pension is taxable
- for pensions commencing from 2006, 52% of the gross pension is taxable
Until 2020, the taxable proportion increases by 2% per year, and from 2021 to 2040 by 1% per year, so that from 2040 pensions are 100% taxable.
Other pensions
E.g. occupational pensions, Riester pensions and basic pensions (Rürup) are 100% taxable.
If you are unsure whether you need to pay income tax, please contact us so that we can review this for you.