Tax advantage and net policy

How the Basisrente pays off twice

With the basic pension (Basisrente), the self-employed and high earners in particular save a lot of money in the accumulation phase: contributions of up to €30,826 (individual assessment) or up to €61,652 (joint assessment, each for 2026) can be deducted 100% as deductible expenses (Sonderausgaben) (§ 10 (1) no. 2 (b) and § 10 (3) EStG, the German Income Tax Act). This considerable tax advantage makes the Basisrente attractive to many clients.

If the Basisrente is offered as a net policy, like Liechtenstein Life Pension, clients benefit twice: because the insurance conditions provide that no acquisition costs are charged within the contract, no acquisition costs are deducted from the contributions in the first years of the contract.

Then there is the question of whether a fee that you agree with the client outside the contract can also be deducted for tax purposes.

The fee: income-related expenses or Sonderausgaben?

Contributions to the Basisrente are Sonderausgaben. For a separately agreed intermediary or advisory fee, on the other hand, the tax treatment has not been conclusively settled. In a ruling on a payment to a professional pension scheme (berufsständisches Versorgungswerk), the Federal Fiscal Court (Bundesfinanzhof, BFH) held that such expenses are by nature anticipated income-related expenses (Werbungskosten), but that as a contribution to basic provision they are only deductible as Sonderausgaben within the maximum deductible amount (BFH, ruling of 19 August 2021, X R 4/19). Whether a fee paid not to the insurer but to the intermediary counts as such a contribution is an open question. As far as can be seen, there is no ruling by the Federal Fiscal Court specifically on intermediary fees for a Basisrente.

If the fee were recognised as Werbungskosten, it would not count towards the maximum deductible amount for Sonderausgaben. Whether the tax office accepts the deduction depends on the individual case. The fee agreement and the invoice should therefore clearly document that the advice related exclusively to the Basisrente.

If the client already receives pension income, a standard allowance of €102 for Werbungskosten is taken into account for it anyway (§ 9a sentence 1 no. 3 EStG). Only actual costs above that amount have an additional effect.

The concrete tax advantage

The following example illustrates the double saving effect of a Basisrente in the form of a net policy:

• If a client pays €10,000 a year into the Basisrente, her taxable income falls by these Sonderausgaben. Assuming the client's personal income tax rate is 42%, she saves €4,200 a year.

• If the tax office recognises the intermediary fee of €1,500 as Werbungskosten, that brings a further saving of €630 at 42%.

Of €11,500 in total, the client in this case gets €4,830 back through her tax return. By the time she reads her tax assessment, she will see how much the Basisrente pays off for her.

The value of your investment can fluctuate.

Please note that tax treatment always depends on the individual case. A binding assessment can therefore only be given by a tax adviser.

Article published by Prosperity Solutions AG