Assessment Basis and Tax Rates
|Insurance type||Assessment basis||Tax rate|
|Life and disability insurance (endowment and annuity insurance of all types) and similar insurance relationships|
|- Endowment insurance including unit-linked life insurance plans with living benefits or living and death benefits, short duration1) and one-time premium payment||Insurance fee||11 %|
|- All other life and disability insurance plans||Insurance fee||4 %|
|Pension fund payments||Insurance fee||2.5 %|
|Health insurance||Insurance fee||1 %|
|Hail insurance||Insured amount for each year of insurance||0.2 %|
|Property insurance||Insurance fee||11 %|
|Transfer of coverage requirement|
|- If the defined benefits are granted to all or certain groups of employees of the respective companies||Coverage requirement or transfer amount||2.5 %|
|- If the defined benefits are not granted to all or certain groups of employees of the respective companies||Coverage requirement or transfer amount||4 %|
For life insurance plans, an insurance fee paid is subject to additional subsequent tax of 7% in the following cases:
- The insurance relationship is changed by whatever means into endowment insurance subject to an 11% tax rate. In the case of waiving of premiums this only applies if the waiving happens within three years of the contract being concluded for a period of more than one year.
- For insurance relationships for which recurring, essentially invariable premium payments are not agreed (one-time premium payment) or for insurance relationships with a waiving of premiums for a period of more than one year within three years from the date of the contract conclusion:
- In the case of endowment insurance, including unit-linked life insurance or annuity insurance, if the insurance is surrendered prior to the end of the minimum contract period1) after conclusion of the contract and the insurance relationship was subject to a 4% tax rate.
- In the case of annuity insurance for which the start of annuity payments prior to the end of the minimum contract duration1) after conclusion of the contract is agreed, if the insurance is paid off with a one-time payment.
1) The insurance tax rate and minimum contract duration for subsequent taxation depend on the contract duration of the insurance agreement; from 1 March 2014 onward, they also depend on the age of the insurance holder and the insured person(s):
11% of the insurance fee, or 7% subsequent tax, are incurred if the contract duration for the abovementioned contract types
- is less than 10 years for contracts concluded before 1 January 2011.
- is less than 15 years for contracts concluded after 31 December 2010 and before 1 March 2014.
- is less than 15 years, or is less than 10 years in cases where the insurance holder as well as the insured person(s) are over 50 years of age, for contracts concluded after 28 February 2014.
Waiving of Premiums
Waiving of premiums means any non-payment of premiums for the purposes of the question of insurance tax liability according to § 6 para 1a subpara 1 and 2 VersStG. Differing from this there is no taxable waiving of premiums if the non-payment concerns an insurance relationship in which the employer pays premiums as part of the company pension scheme for its employees on the basis of a collective agreement, a company agreement or an agreement concluded between the employer and an employee.
Under certain circumstances, the waiving of premiums can lead to a change in qualification or subsequent taxation of the insurance relationship.
The same legal consequences apply to reductions of premiums if these comprise more than 50% of the agreed recurring premium.
Increase of insured amount
Any increase of the insured amount, within an existing insurance contract subject to a tax rate of 4% under § 6, para 1, subpara 1 (b) VersStG, to a total of more than twice the original insured amount (again using a non-recurring, essentially invariable premium, i.e. one-time premium) is considered an independent conclusion of a new insurance contract. An assessment of the duration and the age of the insurance holder and insured person(s) of this new contract must occur to determine the applicable tax rate.