Retirement Income Act
| Basic data | |
|---|---|
| Title: | Law to reorganize the income tax treatment of pension expenses and pensions |
| Short title: | Retirement Income Act |
| Abbreviation: | AltEinkG |
| Type: | Federal law |
| Scope: | Federal Republic of Germany |
| Legal matter: | Tax law |
| Issued on: | July 5, 2004 ( BGBl. I p. 1427 ) |
| Entry into force on: | January 1, 2005 |
| Please note the note on the applicable legal version. | |
The Retirement Income Act is a German product law that with the change of a number of individual laws, the fundamental transformation of the income tax treatment of pension costs and pension benefits and the introduction of deferred taxation of pensions prompted.
history
The reform was triggered by the judgment of the Federal Constitutional Court of March 6, 2002 (file number 2 BvL 17/99), in which "the different taxation of civil servants' pensions according to § 19 EStG and pensions from the statutory pension insurance according to § 22 No. 1 sentence 3 letter a EStG [...] was declared incompatible with the principle of equality of Art. 3 (1) GG ”. At the same time, the Federal Constitutional Court ordered the legislature to remedy the defect by January 1, 2005.
In order to meet this requirement, the Federal Ministry of Finance subsequently appointed the Expert Commission to reorganize the tax treatment of pension expenses and pensions in order to develop a proposed solution. The core of the Commission's proposals was the “three-tier model”, which was enshrined in law in this form almost unchanged.
The law was promulgated on July 9, 2004 and came into force on January 1, 2005. It amended the Income Tax Act , the Income Tax Implementing Ordinance, and ten other laws and ordinances.
Key points of the reform
- Basic pension : Statutory pension insurance , professional pension , old-age insurance for farmers , Rürup pension
- Supplementary pension: Riester pension , company pension scheme
- Investment products: Products that can be used for old-age provision but should not be subsidized for tax purposes (e.g. life insurance )
The key point is the tax exemption for contributions to the 1st and 2nd shift and the subsequent taxation of benefits. In order to protect the federal budget and avoid distortions and disadvantages (double taxation) for taxpayers, extensive transitional regulations have been set.
There is a transition period for recognizing pension expenses as special expenses and a second transition period for the higher taxation of retirement benefits.
The transition phase for the deduction of special expenses from pension expenses began in 2005 and ends in 2025. The maximum amount that can be deducted for single persons is 20,000 euros in 2025 and 40,000 euros for married persons. The maximum applicable amount began in 2005 at sixty percent and then increases by two percent every year until the full one hundred percent is reached in 2025.
The transitional phase for the taxation of retirement benefits lasts from 2005 to 2040, with retirement benefits initially being taxed at fifty percent in 2005 and this taxable portion increasing by two percent annually up to 2020, and then only one percent annually up to 2040 Percent to rise and eventually reach the full hundred percent in 2040.
The so-called cohort principle applies to all new pensioners of a given year: The tax-free portion of the annual pension, calculated as a percentage of the annual pension for the year in which the pension was drawn for the first time , is not redetermined every year, but as a constant absolute amount from the year following the first pension payment Maintained for the entire period of pension receipt. It is also not recalculated as part of the annual “regular pension adjustments”. The only exceptions are recalculations due to extraordinary pension adjustments, for example due to income credits, pension increases as a result of a "mother's pension", omission or change from partial to full pension and the like (cf. § 22 No. 1. a) aa) sentence 4-7 EStG) .
The tax advantage of endowment life insurance is changed. This applies to all contracts concluded after December 31, 2004. In the case of a one-off payment, only 50% of the earnings share (paid amount minus paid amount) is taxable at the individual tax rate if the payment is made after the age of 62 and the contract has existed for at least 12 years. If you have a lifelong annuity paid out, this is also only taxed with the income portion at the individual tax rate, depending on the retirement age. For example, if you draw your pension from the age of 67, the earnings share in this case is 17%. This applies to capital as well as annuity and unit-linked insurance.
criticism
The effects of the reform are criticized by experts. The associated double taxation is unconstitutional. The ARD business magazine Plusminus quotes in its reporting about a. Franz Ruland , former managing director of the Association of German Pension Insurance Institutions.
literature
- Gert Wagner: The new pension and pension taxation. Walhalla specialist publisher. Regensburg, Berlin 2004.
- Uwe Langohr-Plato, Johannes Teslau: The Retirement Income Act and its consequences under labor law for company pension schemes. In: Neue Zeitschrift für Arbeitsrecht 2004, pp. 1297–1301 and pp. 1353–1359.
See also
Individual evidence
- ↑ See Expert Commission on the Reorganization of the Tax Law Treatment of Pension Expenses and Retirement Benefits: Final Report of the Expert Commission on the Reorganization of the Tax Law Treatment of Retirement Provision Expenses and Retirement Benefits. Berlin 2003. Internet final report of the Expert Commission on the reorganization of the tax treatment of pension expenses and pensions. Retrieved January 21, 2019 .
- ^ No more double taxation of pensions , Wirtschaftswoche from June 1, 2016
- ↑ https://www.presseportal.de/pm/129256/4166734
