Recognition of Swiss disability pension in Germany
March 24, 2012 | 40,00 EUR | answered by Michael Herrmann
Good day,
As a Swiss citizen living in Switzerland since 2001, I receive a 100% disability pension from the government and the pension fund of my former employer, totaling approximately CHF 50,000 per year. I am now 53 years old.
I am seriously considering moving my residence to Germany as a single person. My question is: Will my 100% pensions (from the government and my former employer) be recognized in Germany as disability pensions (possibly you can provide me with the relevant German laws)? What is the approximate tax burden if they are recognized?
Best regards and thank you for your information.
Dear inquirer,
first of all, thank you for your inquiry, which I would like to answer based on the information you provided and in the context of your initial consultation. The response is based on the facts presented. Missing or incorrect information about the actual circumstances can affect the legal outcome.
First of all, I must note that I cannot categorize the question regarding the recognition of pensions in Germany. Are you asking about whether Swiss pensions continue to be paid when changing residence, whether the German state enters into the pension rights, or does the question have a different purpose? However, I would like to point out that a German tax advisor is not allowed to address non-tax legal issues for professional reasons.
The tax situation regarding Swiss pension payments after relocating to Germany is as follows.
According to the double taxation agreement with Switzerland, the principle of residence applies to the taxation of annuities. Therefore, pensions are taxable in the country of residence.
The pension payments from the AHV/IV (1st pillar) and the Swiss pension fund (2nd pillar) after the occurrence of the pension event are generally to be included as other income, similar to benefits from the German statutory pension insurance, with the taxable portion (§ 22 No. 1 sentence 3 letter a double letter aa Income Tax Act). For pensions starting in 2005 or earlier, the taxable portion is 50%. In your case, a tax-free pension allowance of 50% of the pension received in 2005 remains. This portion is deducted from the current pension received. The remaining amount is taxable.
The disability pension from the employer's pension fund is taxed as a reduced life annuity with a special yield portion according to § 55 Income Tax Ordinance, subject to a thorough examination of the entitlement. The amount of the yield portion does not depend on the age at the start of the pension, but rather on the duration of the pension payment. The rule is: the shorter the duration of the pension, the lower the yield portion. For example, with a duration of 20 years, a taxable yield portion of 21% would apply.
As you can see, the taxation of pensions in Germany is quite complex. The following is only a rough estimate of the tax burden due to insufficient information.
Assuming that after deducting various pension allowances, approximately 23,000 CHF represent taxable income, the following tax burden would apply:
Income 23,000 CHF
19,100 €
Deducting flat-rate deduction for advertising costs 102 €
Income 19,000 €
Deducting flat-rate deduction for disabled persons (disability 100%, not helpless)
1,420 €
other special expenses
580 €
taxable income
17,000 €
tax-free basic allowance
8,004 €
Income tax maximum 2,000 €
This calculation depends on many other factors. Therefore, the result can only provide a very rough estimate. A significantly higher tax burden is not expected.
I hope that these explanations within the scope of your inquiry and this initial consultation have given you a sufficient overview of the situation.
Yours sincerely,
Michael Herrmann
Dipl.-Finanzwirt (FH)
Tax advisor
