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Decision regarding the deduction of special expenses for contributions to occupational pension schemes for the assessment periods prior to 2005
Press Release No. 33/2008 of 14 March 2008
Order of 13 February 2008
2 BvR 1220/04
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)