Summer, sun, retirement – more and more seniors are enjoying their retirement abroad. However, this can have an impact on your pension entitlement.
The most important things at a glance
Year after year, thousands of German pensioners are drawn abroad. The attraction of spending the old age under palm trees or at least in milder temperatures inspires emigrant dreams. But what are the implications for retirement?
If you want to avoid unpleasant surprises, you should do some research in good time. We explain whether a stay abroad affects the amount of your pension, which tax aspects you should consider and what you should tell the pension insurance company.
Retirement abroad: what do I have to consider?
This mainly depends on whether you draw your pension abroad permanently or only temporarily. If you spend less than six months a year outside of Germany, nothing will change for you. The pension insurance will continue to transfer your full pension to you as normal.
The same usually applies if you move permanently to a country in the European Union, Iceland, Liechtenstein, Norway or Switzerland. However, there may be deductions if your German pension entitlement also includes periods in which you worked abroad. It is best to seek advice on this from the German pension insurance before you move.
If you move your place of residence to a non-EU country or to a country with which Germany has not concluded a social security agreement for a period longer than six months, your pension could be reduced (more on this in the next section).
Communicate new address and bank details
To ensure that you receive your pension on time when you are abroad, you should inform the Deutsche Post pension service or your pension insurance agency of your new address and bank details at least two months before you move (read more about the bank account below).
Also important: If you move abroad permanently, this has tax consequences. However, Germany has concluded so-called double taxation agreements with many countries in order to avoid double taxation (see below).
A stay abroad can also have consequences for your health and long-term care insurance. Let your insurance company advise you in good time. As a rule, your previous membership will remain in place if:
- you have statutory health insurance,
- only receive a pension from the German pension insurance,
- Relocate your place of residence to another EU country
- and there is no separate entitlement to benefits.
Good to know:Deutsche Post’s pension service checks every year whether foreign pensioners are still alive. You will also receive the so-called life certificate, which you can have confirmed by all authorities, pension insurance institutions, banks and German diplomatic missions abroad. In some countries you do not need the certificate because the authorities automatically report the death. This applies to Belgium, Finland, Israel, Italy, Luxembourg, the Netherlands, Austria, Poland, Sweden, Switzerland and Spain.
Will my pension be reduced abroad?
This can happen if your pension is wholly or partly due to certain insurance periods: namely to the so-called Reichsgebiet contribution periods outside of today’s federal territory or periods according to the Foreign Pensions Act, which regulates the pensions of expellees and late resettlers.
These periods are only compensated if you draw your pension in Germany, another EU country, Iceland, Norway or Switzerland.
If the German-Polish pension agreement of 1975 regulates part of your pension entitlements, your pension will also be lower than what you would have received in Germany, another EU country, Iceland, Liechtenstein, Norway or Switzerland. For more information, see the bilingual Brochure of the German pension insurance.
Special feature disability pension
There are also restrictions on the disability pension. If this was not only granted to you for medical reasons, but because you were unable to find a suitable job due to the reduced earning capacity, a permanent stay abroad will result in your pension being reduced or no longer being paid out at all.
If, on the other hand, you are no longer able to work at all for health reasons, you will also receive the disability pension abroad – in full.
What applies to foreign pensioners with regard to tax?
If you live abroad permanently as a pensioner, you are subject to limited tax liability in Germany. This means that no basic allowance applies to you. Your taxable income is taxed from the first euro. In addition, you can no longer benefit from spouse splitting and can no longer claim extraordinary expenses such as medical expenses.
However, you can avoid this if you receive more than 90 percent of your income from Germany and apply to the responsible tax office for unlimited tax liability. You can then use the basic allowance again.
