How are civil servants' pensions treated for tax purposes?

The answer takes into account the legal situation applicable from January 1, 2005 as a result of the Retirement Income Act.

Civil servants' pensions are taxable wages, which are subject to income tax deduction in the same way as remuneration for active service. The salaries of retired civil servants, judges and soldiers or their widows and orphans are taxable as a whole. However, from 2005 onwards, a pension allowance of 40% of these emoluments was granted, up to a maximum of EUR 3,000 in 2005, which will be reduced for each new cohort until 2058. If the pension commences in 2025, the pension allowance amounts to 13.2%, up to a maximum of €990.

For the individual pensioner, the pension allowance applicable on commencement remains the same for the entire duration of the pension.

The deduction of the employee lump sum will no longer apply from 2005. Instead - as with pensions - the lump sum for income-related expenses of €102 will be deducted.

In order to avoid an excessive burden during the transition phase until 2058 due to the abolition of the employee lump sum, a supplement to the pension allowance was introduced, which will also be reduced until 2058. For existing pensioners and those starting their pension in 2005, the supplement to the pension allowance is EUR 900. For those starting in 2025, the supplement to the pension allowance is EUR 297.

You can also find information on the Retirement Income Act in the "Tax tips for senior citizens".

You may also be interested: What changes have been made to income and wage tax since 01.01.2005 as a result of the "Retirement Income Act"?