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How is the private Pension insurance taxed?
How is the private Pension insurance taxed?

Every investment is taxed, but because your investment is under the guise of pension insurance, you have considerable tax advantages

Laura avatar
Written by Laura
Updated over 2 weeks ago

Monthly pension payouts are taxed. This in turn depends on the age of the pensioner. The income share decreases with age: while it is still 22% for 60-year-olds, it is only 15% for 70-year-olds.

The later you retire, the lower the taxes. The table under § 22 of the Income Tax Act (EstG) provides information on the amount of the income component of the private pension. The current percentages were redefined on January 1, 2005.

Completed age at the time of retirement

Income share as a percentage of the pension in accordance with § 22 EStG

50 years

30 percent

55 years

26 percent

60 years

22 percent

61 years

22 percent

62 years

21 percent

63 years

20 percent

64 years

19 percent

65 years

18 percent

For example:

  • If you retire at 63, the taxable portion of your private pension is 20 percent

  • If someone receives EUR 500 per month from a private pension insurance policy, 20 percent of this must be taxed at the individual tax rate - i.e. EUR 100. If the tax rate is 25 percent, a tax of 25 euros is payable.

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