Which insurances can be deducted from taxes?

Different types of insurance are chosen to provide the right protection in case of unexpected and unpleasant situations. In the German state, many insurance policies can be deducted from the annual tax return. Which ones exactly? And how much money can be reclaimed from the tax refund through this measure? These questions are answered in this article. There are also tips on what to pay attention to when filling out the corresponding documents and whether this still needs to be done personally and on paper today. You are invited to read.

Which insurances can be deducted from taxes?

Many German insurances can be considered and deducted in the annual tax return, ultimately leading to an increase in the final settlement amount. In Germany, insurance policies are recorded in the tax return as one of three applicable classifications, on which the final amount of one’s share of the insurance costs depends. They relate more precisely to:

• Expenses for pensions within the so-called special expenses,
• Costs associated with income,
• Care costs within the special expenses.

In the further part of the article, the above categorization is described in more detail.

Insurance deduction as pension expenses within the special expenses

A significant portion of German insurances can be deducted from taxes as so-called pension costs within the special expenses. It’s important to note that a maximum sum of 1,900 euros applies. Almost every taxable person approaches this value quickly because pension expenses include contributions to nursing insurance as well as health insurance. See which types of insurance can be deducted from the German tax return:

• Health insurance.
• Additional health insurance.
• Nursing insurance.
• Unemployment insurance.
• Disability insurance.
• Liability insurance (including for mechanical vehicles).
• Term life insurance.

What must be observed regarding tax on insurances in Germany as pension expenses within the special expenses? In any case, in the event of marriage, the above-mentioned amount is doubled. If the insurances are exclusively related to work, they should be deducted as costs associated with income.

Insurance costs associated with income

Insurance that exclusively covers professional risk can be deducted from income tax (tax-deductible) as costs associated with income. For partially covered professional risk, it’s important to make a distinction. For income costs, there is no fixed upper limit for expenses associated with income, and therefore the entire amount can be easily deducted from income tax. But what should be paid attention to? After reaching the advertising allowance for employees, every euro spent on occupational insurance can significantly contribute to reducing tax. See examples of insurance policies (tax return insurances) as expenses to be settled that are associated with income:

• Professional liability insurance.
• Legal protection insurance (professional).
• Accident insurance for occupational accidents.

Insurance tax and expenses for old-age pension provision

Insurance policies for old age play a very important role in German tax returns. On the other hand, there are expenses for statutory and private pension insurance, such as the Rürup pension. In this context, the following facts applied in 2021:

• 92 percent of the contributions paid could be deducted as special expenses (this referred to the maximum amount or the contributions paid);
• the maximum amount for single individuals was 23,725 euros (this figure doubled for registered partnerships);
• the percentage increases by two percentage points annually (until 2025);
• when calculating the amounts in question, the employer’s contribution to the statutory pension is also taken into account.

Insurances from the tax return – which cannot be deducted from taxes in Germany?

Not all insurance policies can be deducted under the annual German tax return. There is no possibility for formal procedures in this regard for so-called property insurances, which are characterized by the protection of specific objects or supplies. Such include, for example:

• Bicycle insurance,
• Fully comprehensive insurance (car insurance tax return),
• Luggage and travel cancellation insurance,
• Life insurance with contract conclusion on or after January 1, 2005,
• Building and household insurance.

Possibility of deducting tax on house insurance – what should be known

As already mentioned, property insurances, such as those covering property, cannot be deducted from income tax. However, there is an exception to this rule, whereby any house insurance necessary for the exercise of a legal activity can be considered as a so-called income-related expense in the tax return (residential building insurance tax-deductible). An example for clarification: If the study is tax-deductible, a portion of the annual contributions to household insurance can be deducted. For an office with an area of 25 square meters in an apartment with 100 square meters, this would be 25 percent of the house insurance costs.

Office with an area of 25 m² → Apartment with an area of 100 m² → 25% of the house insurance costs as part of the deduction of the annual contributions paid for house insurance.

Which documents do I have to submit?

It is not necessary to present any receipts of expenses or even less forms to the tax office that confirm what the office wants to have confirmed in connection with the tax return. This situation has existed since the requirement for taxable persons in Germany to retain documents was introduced. This concerns, for example, insurance costs that are automatically considered in the income tax return – such data can be checked at any time by the office staff. However, should the case arise that the tax office requires the submission of the relevant forms, one is obliged to do so; that is, to prove that what is written in the tax return corresponds to the actual, real condition. As a rule, the higher the declared costs for services are, the more likely it is that the German tax office will request corresponding documents.

Insurances in Germany and Riester – what is the connection between them?

In Germany, there is another form that relates to Riester pension contributions, namely the Anlage AV. Here you enter the data found on the certificate from the Riester provider, which every taxable person receives at the beginning of each calendar year. For these to be considered at all, you must know that the maximum deduction amount for special expenses must not exceed 2,100 euros. The German tax office automatically determines whether it is possible to benefit from this type of deduction (this occurs within the framework of the so-called cheaper tax test); subsequently, it precisely examines which option of tax accounting is more advantageous – Riester support or deduction of special expenses.

Which insurances can be deducted from taxes and where do you enter the corresponding data in the tax return?

The correct entry of insurances in the tax return is closely linked to the classification described above; that is, where the corresponding data must be entered depends on whether expenses for pension services, pensions, or income-related costs are to be claimed. Depending on the case, different attachments need to be filled out. Alternatively, this can be done in a dedicated tax app, which saves time (you would normally have to find the appropriate section to enter the data) but also health and your own nerves. A tax return program (for example, Taxando) guides you step by step through the entire deduction process. It’s enough to honestly answer the questions that appear on the screen. Deduct your insurance tax with us today – we invite you.