Gert Zimmermann has prepared financially well for his retirement.

As a dentist he was covered by the professional pension scheme, he also continued the statutory pension voluntarily, including a "higher insurance".

In addition, three Rürup pensions and almost 20 private old-age provision contracts.

And yet he sits in front of the judges at the Federal Fiscal Court in Munich on Wednesday and complains: "I haven't managed to maintain my standard of living in retirement and I'm also being punished by double taxation." The 74-year-old carefully calculated that after he retired in 2009.

"That's really bad," he said.

He only reveals to the Federal Fiscal Court what amounts he is actually dealing with.

In public he merely indicates: "There is a lot of money involved."

Corinna Budras

Business correspondent in Berlin.

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    This applies not only to Gert Zimmermann, who may be a blatant case in this regard, but also to a second plaintiff who made it to the highest German tax court on Wednesday. It is a tax advisor who retired in 2007 and also feels overwhelmed by the state. In addition, more than 140,000 pensioners have appealed their tax assessment. So it is a fundamental problem for millions of pensioners in Germany and those who want to become one in the next few decades. Everyone is affected, at least if they pay significant taxes. As a rule of thumb, the situation is less explosive for employees than for the self-employed because employers pay half of the contributions - and tax-free. Should the defendant double taxation really exist,they would probably be about smaller amounts.

    The tax administration naturally sees the matter differently from the plaintiffs.

    In the longstanding legal dispute, she has always insisted that there is no question of double taxation.

    But in the course of the hearing the picture crumbled.

    The Senate, headed by Judge Jutta Förster, confronted the Federal Ministry of Finance with probing questions that already suggested that the judgment on May 31 could be unpleasant for the tax authorities.

    The tax is currently striking in two places

    The case law of the Senate on the Retirement Income Act over the past 15 years has been shaped by the opinion that the regulations are "still constitutional" because the legislature has a large margin of discretion, explained Förster. There were certainly "stomach grievances". “But there was always a red light for us,” she said. And that was double taxation. The key point here is the question of what role the basic tax allowance of around 9,000 euros per year is supposed to guarantee every taxpayer the subsistence level. That, it quickly became clear, will decide the matter. You have to know that the tax is currently hitting two places. First during working life when the pension contributions are due because they are currently not fully tax deductible.The second time the tax authorities hold their hand when the pension is paid out.

    The reason for this is a change in pension taxation, which the legislature initiated in 2005 at the behest of the Federal Constitutional Court and which will take place gradually over the next few decades until 2040. Until then, the portion of the pension that is subject to tax will be gradually increased until it is finally fully taxed from 2040 - at least beyond the basic tax-free amount of 9,000 euros per year. On the other hand, pension contributions will gradually be made tax-free, and this part should be completed in full from 2025. This is why the cause is also of interest to younger people who will only retire after 2040: Then they will have to tax their pension at 100 percent, but may have only been able to deduct their amounts to a limited extent over decades.

    Also noteworthy was the position of the Federal Ministry of Finance, which pursued a strategy of multiple protection during the negotiation: The existing system is fair and balanced, emphasized Rolf Möhlenbrock, Head of the Tax Department of the Federal Ministry of Finance. However, with a “standardized procedure” where the taxation of pensions is now a necessity, “frictions” can arise in the marginal areas. To be on the safe side, Möhlenbrock therefore brought a de minimis limit of 10 percent into play, the insignificance of which may not be immediately apparent to every taxpayer. Specifically, this means that although the employed person has to keep the balance as to what the employee pays into the fund as pension contributions from his already taxed income and what he later gets back out as a tax-free pension,For example, 100,000 euros each over a working life. However, if it were up to the Federal Ministry of Finance, this bill could end up with up to 10,000 euros in favor of the state without a court being able to intervene. However, the Federal Constitutional Court ruled as early as 2002: There should be no double taxation of pension amounts and the later pension.

    Perhaps the Ministry of Finance is anticipating an impending disaster, in any case they were surprisingly open to corrections, although the verdict is still pending. The SPD-led house is not in an enviable position, right in the middle of the election campaign. The anger of more than 20 million pensioners is not a popular attraction in these times, especially since the federal government was recently ripped off by the Federal Constitutional Court. At the beginning of the month the younger generation won there; now the pensioners in front of the Federal Fiscal Court could cause lasting shocks.