The answer takes into account the legal situation applicable as of January 1, 2005 as a result of the Retirement Income Act.
The pensions of civil servants are taxable wages and salaries, which are subject to income tax deduction in the same way as remuneration for active service. The remuneration of retired civil servants, judges and soldiers, or their widows and orphans, is taxable as a whole. However, starting in 2005, a pension allowance of 40% of these emoluments, up to a maximum of EUR 3,000 in 2005, was granted, which will be reduced for each new cohort until 2040. When the pension starts in 2021, the pension allowance will be 15.2%, up to a maximum of €1,140.
For the individual pensioner, the pension allowance applicable at entry remains the same for the entire period of pension receipt.
The deduction of the employee lump-sum allowance will no longer apply from 2005. Instead - as with pensions - the income-related expenses lump-sum allowance of €102 will be deducted.
In order to avoid an excessive burden due to the discontinuation of the employee lump sum in the transitional phase up to 2040, a supplement to the pension allowance has been introduced, which will also be phased out by 2040. For current pensioners and for those starting their pension in 2005, the supplement to the pension allowance is 900 euros. For those starting in 2021, the supplement to the pension allowance is 342 euros.
Note
Information on the Retirement Income Act can also be found in the "Tax Tips for Seniors".
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