Federal Constitutional Court - Press office -

Press release no. 33/2008 of 14 March 2008

Order of 13 February 2008 – 2 BvR 1220/04; 2 BvR 410/05 –

Decision regarding the deduction of special expenses for contributions
to occupational pension schemes for the assessment periods prior to 2005


The complainants, a self-employed lawyer and a self-employed physician
and his wife, are complaining of insufficient consideration of their
contributions, in particular those to occupational pension schemes, in
terms of income tax by virtue of § 10.1 no. 2 in conjunction with §
10.3 of the Income Tax Act (Einkommensteuergesetz) in the versions
applicable until 31 December 2004.

The Second Senate of the Federal Constitutional Court did not accept
the constitutional complaints for adjudication because they have no
adequate prospects of success against the background of the judgment of
the Federal Constitutional Court of 6 March 2002 on the taxation of
pensions and of the new provision on taxation of old-age pensions
effected by the Old-Age Income Act (Alterseinkünftegesetz).

In essence, the non-acceptance order is based on the following considerations:

1. The Federal Constitutional Court ruled in the judgment of 6 March
   2002 that the unequal taxation of pensions is to be accepted until
   31 December 2004. The legislature was instructed to create a new
   provision with effect as per 1 January 2005.

   The legislature correctly understood the legislative mandate such
   that equal taxation of old-age pensions is only possible if the
   taxation of all existing old-age pension systems is coordinated in
   the new provision. Therefore, the provisions contained in the
   Old-Age Income Act which entered into force as per 1 January 2005
   are not restricted to the pensions of civil servants, and those of
   dependent employees from statutory pensions insurance, which were
   the subject-matter of the judgment on the taxation of pensions. They
   rather encompass the entire complex of the taxation of provident
   expenses and old-age pensions, and include occupational pension
   schemes.

   A review by the Federal Constitutional Court of the deductibility of
   contributions to occupational pension schemes for the assessment
   periods prior to 2005 can no longer be considered. In the judgment
   of 6 March 2002, the Federal Constitutional Court had forgone
   obliging the legislature to retroactively amend the various
   provisions on the fiscal treatment of provident expenses and pension
   payments. Although contributions to occupational pension schemes
   were not the subject-matter of the judgment of 6 March 2002, the
   complainants' complaints cannot be successful for reasons of
   equality with effect for the assessment of periods prior to 2005; as
   self-employed members of occupational pension schemes, the
   complainants certainly had to accept - to the same degree as was
   required from retired civil servants until 31 December 2004 - the
   unequal taxation of their old-age pensions in comparison to members
   of statutory pensions insurance who were not self-employed.

2. There can be no question of a constitutional-court review of the
   deductibility of old-age provident expenses for assessment periods
   prior to 2005 with regard to the prohibition of double taxation.

   Whether the provisions of the law on income tax in the phase of
   establishing old-age pensions prior to the entry into force of the
   Old-Age Income Act, and the provisions in the pension phase since
   the entry into force of the Old-Age Income Act, lead in overall
   terms to a violation of the prohibition of double taxation in
   certain cases is not to be decided here; the prohibition of double
   taxation does not permit one to derive a claim to the specific
   deductibility of contributions in the contributory phase. The
   legislature can equally respond to the prohibition of double
   taxation by a correspondingly less incisive encroachment in the
   pension phase. A complaint of a violation could hence be asserted in
   the assessment periods of the pension phase in which the old-age
   pensions are subject to taxation.

(Re the deduction of special expenses for health insurance
contributions see press release no. 32 of 14 March 2008)


This press release is also available in the original german version.