Partial retirement - change of tax class
December 28, 2009 | 30,00 EUR | answered by Oliver Burchardt
Dear Sir/Madam,
My wife is currently in tax class V, while I am in tax class III. Starting from 01.01.2010, I will be entering partial retirement. My salary will then be approximately 2,050 euros gross, while my wife's will continue to be around 1,650 euros gross.
In a preview calculation of my partial retirement salary, my employer calculated a statutory net amount of approximately 1,740 euros and a top-up amount of 640 euros (tax class III); therefore, the total payout would be around 2,380 euros, with private health insurance still to be paid.
I intend to switch to tax class V and have my wife switch to tax class III at the beginning of the partial retirement on 01.01.2010.
1. If I switch to tax class V, my statutory net amount would only be around 1,100 euros. In this case, does my employer need to increase the top-up amount from 640 euros to 1,290 euros so that I can again have access to the 2,380 euros (which should be the minimum net amount according to the partial retirement law)?
2. Can he accuse me of abuse of rights in this case, even though he is reimbursed the top-up amount by the Federal Employment Agency?
3. What could I potentially argue against the accusation of abuse of rights? Would it be sufficient for my wife to increase her working hours to 75% (gross then approximately 2,500 euros)?
4. How can I ensure that my employer accepts tax class V for me and therefore has to pay a higher top-up amount than in tax class III?
5. How would a tax class change from currently III/V to IV/IV with the above-mentioned salary structure be evaluated? Could the accusation of abuse of rights also apply here?
6. What is your personal recommendation?
Thank you in advance for your response.
Dear inquirer,
Thank you for your inquiry, which I am happy to answer as part of an initial consultation.
The tax assessment is based on the information provided. Adding, changing, or omitting information can affect the tax assessment.
The change of tax class that you are seeking, in order to achieve a lower net salary that the employer then has to top up to the legally required minimum amount, has already been definitively decided by the Federal Labour Court. In its judgments of 9.9.2003 (Case Nos. 9 AZR 554/02 and 9 AZR 605/02), the Federal Labour Court ruled that changing tax class is abusive in all cases where the choice of tax class is obviously disadvantageous. Due to the abuse, the employer is not obligated to pay a higher top-up amount.
The intention of your wife to agree to a higher working time in order to achieve a higher salary is generally suitable to dispel the accusation of abuse. However, a detailed tax consultation is necessary to calculate how high your wife's salary must be in order to argue successfully. It can be assumed that your employer will take the position that the change is abusive. In this case, you will likely have to demand the payment of the increased top-up amount through legal action.
The specific assessment of which measures are necessary to successfully counter the accusation of abusive change of tax classes is not possible in the context of this forum or based on the information provided, as extensive liability risks arise here in light of the expected stance of your employer. Therefore, I recommend that you seek detailed tax advice from a local colleague. I am also available for this consultation, and I would fully credit the amount paid here.
I hope to have given you an initial overview of the situation.
Best regards,
Oliver Burchardt
Certified Public Accountant
Tax advisor
