These Insurance Policies Are Tax-Advantaged (steuerbegünstige Versicherungen)

When it comes to insurance, it pays to look at the tax return, because the monthly contributions for household contents, liability, life insurance the like can quickly turn out to be very high.

It is all the more interesting to know which costs the tax office is considering or which policies are even subsidised by the state. However, in order to claim a tax advantage, certain conditions must be met.

For a special amount to be deducted (Sonderausgabenabzug), all insurances must cover private risks. Occupational risks are usually not considered. Here we give an overview of everything worth knowing.

The Requirements

The basic requirement is that the policy holder also pays the contributions out of his own pocket. Only then it is possible to set a policy in the tax return. With spouses, it is sufficient if one partner is the policy holder.

Note: In the case of pension expenses (Altersvorsorgeaufwendungen), only contributions for one’s own pension are recognised. Contributions for health and long-term care insurance (Kranken- und Pflegeversicherung) are only taken into account if they have been paid exclusively for themselves or for a dependent (unterhaltsberechtigt) person.

Contributions related to tax-free income

Those who record tax-free income and pay insurance premiums in this context can not claim them for tax purposes. Thus, certain benefits, such as health insurance subsidies, can not be deducted from the tax. The situation is similar with the company pension scheme, in which the contributions taxed by the employer are not taken into account.

Note: In general, insurance premiums are deductible from the tax in the year of payment.

Retirement Expenses (Altersvorsorgeaufwendungen)

The tax office considers pension benefits intended for old-age provision.

These include primarily contributions to

• Statutory pension insurance (gesetzliche Rentenversicherung)
• Rürup pension
• Professional care institution (berufsständischen Versorgungseinrichtung)
• Agricultural pension fund (landwirtschaftlichen Alterskasse)
• Compulsory contributions due to an independent activity as well as voluntary contributions

What is being funded?

Rürup pension

A Rürup pension is funded (kapitalgedeckt) and not pay-as-you-go (umlagefinanziert). Persons with a Rürup contract benefit not only from financial security in old age but also from other benefits. Contributions made can be claimed in the income tax return. It is particularly interesting that the proportion of deductible costs increases from year to year. Already since 2015 all deposits can be credited in full. This creates a tax advantage that customers can benefit from. The maximum amount, which is taken into account by the tax authorities, for single people stands at 23,362 euros and for married couples at 46,724 euros.

Other pension expenses

In addition to the pension expenses, the so-called “other pension expenses” (sonstige Vorsorgeaufwendungen) are deducted as special expenses from the tax.

These are

• Statutory unemployment insurance (gesetzliche Arbeitslosenversicherung)
• Statutory pension insurance (gesetzliche Rentenversicherung)
• Statutory health insurance (gesetzliche Krankenversicherung)
• Employment and disability insurance (Erwerbs- und Berufsunfähigkeitsversicherung)
• Private accident insurance (private Unfallversicherung)
• Private liability insurance (private Haftpflichtversicherung)
• Term life insurance (Risikolebensversicherung)
• Life insurance with contract beginning until 31.12.2004