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The tax free part

of (statutory) old-age pensions depends on the calendar year in which the pension starts; the later the pension starts, the lower the tax-free portion. The tax-free portion of the pension is “fixed” as an amount at the start of the pension; subsequent “regular” pension increases are fully taxable. It was questionable whether this also applied to adjustment amounts for bringing pensions in the new federal states into line with the level of pensions in the West, or whether new, independently taxable pension portions existed in this respect, for which a separate tax-free portion would then also result.

After the Federal Fiscal Court ruled,

that the corresponding adjustment amounts are also “normal” pension increases and therefore do not result in an additional tax-exempt amount, the tax authorities have decided by general ruling that all appeals filed in this matter up to this date will be rejected as unfounded.

It should be noted that further proceedings are pending before the Saarland Fiscal Court on the legality of pension taxation; the complaint here is that there is at least partial double taxation. Affected tax assessments can be challenged by means of an appeal, if necessary, and a stay of the decision can be requested with reference to the pending proceedings.