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Payout of direct insurance and taxation

March 22, 2012 | 25,00 EUR | answered by Michael Herrmann

Hello,

I have the following question:
Through my employer, I had a direct insurance policy according to § 40b (start of contract 01.11.2000), which I have now cancelled and requested the payout. The payout was made to the employer's account and they paid me with the salary slip - however, it was credited to the gross salary as usual and then fully taxed. Is this correct or is there no other possibility?

Thank you in advance.

Kind regards

Michael Herrmann

Dear inquirer,

First of all, thank you very much for your inquiry, which I am happy to answer based on the information provided and in the context of your initial consultation. The response is in accordance with the description of the situation. Missing or incorrect information about the actual circumstances can affect the legal outcome.

The present direct insurance is a so-called "old promise," before the introduction of the Income Tax Act on January 1, 2005.

The contributions to this insurance could be flat-rate taxed by the employer up to a maximum of €2,158 annually. Since a tax was already paid, even if at a favorable rate, during the contribution phase, the capital repayment part of the payout sum remains tax-free. The capital settlement is generally tax-free if the requirements, 59th birthday and 12 years of duration for pension contracts that provide a benefit during one's lifetime, are met. However, as of January 1, 2004, full contributions are required in the statutory health insurance.

You should inquire with your employer on why they consider the capital settlement to be subject to taxation, based on this information. For example, I see an issue with the duration of 11 years and 4 months.

Since the payout has already taken place, there is no room for further adjustments.

I hope that this information has provided you with a sufficient overview of the situation in the context of your initial consultation, and I remain

Sincerely,

Michael Herrmann
Dipl.-Finanzwirt (FH)
Tax consultant