Taxation of pensions
November 3, 2010 | 80,00 EUR | answered by Dipl.BW/SB Ulrich Stiller
I am married to a Korean national, 66 years old, and have been receiving a statutory German pension since October 2009 and a company pension from my German employer since 2005 (April). I have been living in Korea for 30 years and according to the FA Berlin, I am exempt from German taxes (limited tax liability). I am no longer employed.
In order to provide my son, who is still attending school (until 2013 high school, then university), with a good education, I will establish a residence in Berlin in 2011, but will maintain the apartment in South Korea with my wife. My wife, who is not employed and has no income of her own, does not intend to establish a residence in Germany but will visit for approximately 90 days per year.
The statutory and company pensions are transferred to my German account gross for net.
Question:
How will I/we be taxed?
Joint assessment is likely not possible, since the wife will remain outside the EU. What German tax advantages are still possible due to this private double household situation?
Any other tax advice in this situation?
Thank you.
Dear Seeker,
Thank you for your inquiry, which I would like to answer based on your information and in the context of your situation in a first consultation as follows:
In 2011, you had a residence in Germany and are therefore subject to unlimited income tax liability. Whether this is a primary, secondary, or multiple residence does not matter for the assessment of unlimited tax liability. By having a residence, you are subject to unlimited income tax liability in Germany.
From a tax perspective, you and your wife will be jointly assessed, regardless of whether your wife has income or not, if your wife:
1. is subject to unlimited income tax liability
AND
2. you do not permanently live apart from your wife.
Your wife is subject to unlimited tax liability if she has her residence in Germany, specifically in the shared residence with you. Therefore, you should also register your wife at the residence in Germany. The fact that your wife spends most of her time in Korea does not constitute permanent separation, as living separately does not automatically imply the dissolution of the marital union, especially if the separation is temporary and you continue the marriage despite the physical distance. Also, your wife's visit for approximately ¼ of the year speaks against a physical separation.
Therefore, in your case, the conditions for joint assessment according to my previous explanations should be met, so the more favorable income tax splitting table will be applied.
Your pension from the statutory pension insurance will be taxed with the tax portion. Since you retired in 2009, the tax portion of the pension is 58%, meaning 58% of the pension will be subject to taxation. The company pension constitutes a pension benefit, which is taxed as income from non-self-employment after deducting the pension allowance. If, after deducting special expenses, extraordinary burdens, and personal allowances, your taxable income does not exceed the basic allowance of approx. 16,000 euros, no income tax is due.
I hope I could assist you.
Best regards,
Ulrich Stiller
Tax Advisor/Dipl. Business Administrator
