National Insurance Class 3 contributions and German tax

[warsteiner70]

I know you can claim NI Class 3 contributions for the UK pension in your German taxes but does this also apply for back payments for previous years?

For example I have already filed my tax form for this year in Germany however if I decide to make NI Class 3 contributions for 2020/2021, 2021/2022, and 2022/2023 later this year can I claim these back when completing my German taxes next year? Or can you only claim back the contribution for the same year as the tax form i.e. the contributions for the 2023/2024 year will be filed with my 2024 German taxes?

Thanks

[Eric7]

I would be very interested in the answer to this too!

It would be great if you could claim back previous years, but I imagine there would be a time limit for how far you could go back (if at all).

[PandaMunich]

I know you can claim NI Class 3 contributions for the UK pension in your German taxes but does this also apply for back payments for previous years?

For example I have already filed my tax form for this year in Germany however if I decide to make NI Class 3 contributions for 2020/2021, 2021/2022, and 2022/2023 later this year can I claim these back when completing my German taxes next year?

In the German tax return, things go by when you pay for them.
So if you pay for them in 2024, you will claim them in your German income tax return for 2024, in line 6 of Anlage Vorsorgeaufwand:

2024-08-01 14_42_58-aav_anlage_vorsorgeaufwand_2023.pdf - Adobe Acrobat Pro.jpg (103.92 KiB) Viewed 601 times

[warsteiner70]

Great, thanks for the confirmation Panda

[Eric7]

Is there a limit to how much you can claim?

I'm considering back-paying 16 years worth...

[GaryC]

That is something I have wondered about.

My wife claimed 1 year of Class 3 at about 1,000€ and that was fine but 16 years at Class 3 (as opposed to the cheaper Class 2) would be about 16,000€ in one tax year, potentially wiping out a large proportion of taxable income.

I await our Oracle's verdict...

[PandaMunich]

Is there a limit to how much you can claim?

I'm considering back-paying 16 years worth...

Yes, the limit is 27,566€ in 2024 if you're single, or 55,132€ as a married couple (you get to use any unused part of your spouse's limit), see the table in chapter 2 in here: https://www-finanztip-de.translate.goog ... r_pto=wapp
But this amount also has to cover your 2024 German public pension contribution.

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Example:
Let's assume that you are a high earning employee, with a yearly gross salary that is higher than the Rentenversicherung-Beitragsbemessungsgrenze of 90,600€ (in 2024): https://de-m-wikipedia-org.translate.go ... rsicherung
This still leads to the same public pension contribution as if your gross salary had "only" been 90,600€, since the public pension contribution is based on maximum 90,600€ per year gross salary.

27,566€ limit for 2024 for a single:
- 7,519.80€ employee's part of German public pension insurance: 8.3% * 90,600€
- 7,519.80€ employer's part of German public pension insurance: 8.3% * 90,600€
____________________________________________________________________
10,714.40€ "space" left for your UK NI contributions paid in 2024


If you're married and both of you are high earners, but only one of you wants to pay UK NI contributions:
55,132€ limit for 2024 for a married couple
- 7,519.80€ - husband - employee's part of German public pension insurance: 8.3% * 90,600€
- 7,519.80€ - husband - employer's part of German public pension insurance: 8.3% * 90,600€
- 7,519.80€ - wife - employee's part of German public pension insurance: 8.3% * 90,600€
- 7,519.80€ - wife - employer's part of German public pension insurance: 8.3% * 90,600€
____________________________________________________________________
21,428.80€ "space" left for your UK NI contributions paid in 2024

[GaryC]

So, given that the absolute deadline to pay these historic years is, for most of them, 5 April 2025, it might make sense to pay some now, and the rest in January, or something. As you can pay any whole year in isolation, it shouldn't be too difficult to do the maths and ensure you don't hit that upper limit...

[Eric7]

Thanks Panda!

I don't pay any German public pension so would have the full amount available.

[Eric7]

That is something I have wondered about.

My wife claimed 1 year of Class 3 at about 1,000€ and that was fine but 16 years at Class 3 (as opposed to the cheaper Class 2) would be about 16,000€ in one tax year, potentially wiping out a large proportion of taxable income.

I await our Oracle's verdict...

Hi Gary, how would I go about getting Class 2 accepted, as opposed to Class 3?
From the kind of vague conditions on the website I think I qualify...

Do you know the concrete conditions required for Class 2?

[yesterday]

When I asked for class 2


I was told over the phone that, as long as I was paying contribution in Germany, I could pay class 2 in the uk

I applied and got class 2, no proof was asked for, I just applied by post

By the way, the UK is talking about means testing the UK state pension, if they do that, depending on your pension income, you might get a reduced or no UK state pension, after having made all the payments

Class 2 is very cheap, so I carry on, not sure I would carry paying for the UK state pension if I only had class 3 status

Probably would, but u have to think about the risk

[GaryC]

If you already meet the criterion to pay Class 3 - 3 consecutive years of UK residence, OR, 3 years of NI contributions, then you must also have been working in the UK until immediately before you left the UK (I think the law refers to you being "ordinarily" an "employed earner" - ordinarily takes it normal dictionary meaning) and must be/have been working abroad (an ordinarily employed earner) for any week you want to pay Class 2. If you worked part of year and part not, then you would get a mix of Class 2 and 3.

To apply you need to send form CF83 to HMRC and await their reply. They must have that before 5 April 2025 but I would do it now. The online form takes only a couple of months to get sorted. Sometimes HMRC come back with Class 3 in error as they have misinterpreted something they have been given.

Have a look at the NI38 https://www.gov.uk/government/publicati ... broad-ni38

The link in "Details" takes you to the online CF83.

The above will tell you how many years you can pay; DWP (or I) can tell you how many will improve your pension.

[GaryC]

Thanks Panda!

I don't pay any German public pension so would have the full amount available.

That would suggest you are not working in Germany, so would not get Class 2

[yesterday]

Or working in Germany, but self employed and decide not to pay into the German state pension

[warsteiner70]

By the way, the UK is talking about means testing the UK state pension, if they do that, depending on your pension income, you might get a reduced or no UK state pension, after having made all the payments

I'm sure this will happen at some point but if we can claim the payments back in the German tax declaration then it will probably still be worth it even if you end up with a much lower pension or even no pension.

[Eric7]

That would suggest you are not working in Germany, so would not get Class 2

Or working in Germany, but self employed and decide not to pay into the German state pension

Apart from a period of 18 months where I was a full-time employee at a company, I was self-employed up to 2009 and since then have been the Geschäftsführer in my own GmbH. Would that period from 2009 count even though I wasn't obliged to pay any Sozialversicherungen or Pension etc.?

[Eric7]

By the way, the UK is talking about means testing the UK state pension, if they do that, depending on your pension income, you might get a reduced or no UK state pension, after having made all the payments

I'm sure this will happen at some point but if we can claim the payments back in the German tax declaration then it will probably still be worth it even if you end up with a much lower pension or even no pension.

Well it wouldn't be worth it if you end up with NO pension!

These payments only reduce your taxable income, so you'd be saving at most 40-odd% of the cost through a tax rebate.

[GaryC]

That would suggest you are not working in Germany, so would not get Class 2

Or working in Germany, but self employed and decide not to pay into the German state pension

Apart from a period of 18 months where I was a full-time employee at a company, I was self-employed up to 2009 and since then have been the Geschäftsführer in my own GmbH. Would that period from 2009 count even though I wasn't obliged to pay any Sozialversicherungen or Pension etc.?

As long as your were an ordinarily employed or self-employed earner in Germany, then you should get Class 2 in the UK. That would be fine while self-employed or an employee and presumably as the director of your own company you would also meet that criterion.

[GaryC]

By the way, the UK is talking about means testing the UK state pension, if they do that, depending on your pension income, you might get a reduced or no UK state pension, after having made all the payments

I'm sure this will happen at some point but if we can claim the payments back in the German tax declaration then it will probably still be worth it even if you end up with a much lower pension or even no pension.

Well it wouldn't be worth it if you end up with NO pension!

These payments only reduce your taxable income, so you'd be saving at most 40-odd% of the cost through a tax rebate.

The UK may be talking about means-testing but the government isn't.

There will be another pension review in accordance with the requirements of the Pensions Act 2014 (that introduced the new state pension from 2016) but all parties have committed to giving at least 10 years' notice of significant changes to the system. So, while it may happen at some point, it would have to be recommended, consulted and legislated, then introduced with sufficient notice etc. I imagine there would be significant push-back and all parties would be nervous about being re-elected, etc. So, how long might it all take and would they dare to set the means test below, say £100k in today's terms, i.e. the point at which you have your personal tax allowance withdrawn?

Answers on a postcard...

[GaryC]

Someone just said on a different forum that "Post-Brexit the Germans no longer accept contributions to the UK state system for deduction of tax, sadly. I just lost a fight with Finanzamt over this".

I suggested that is not correct and that Brexit has not changed anything in that regard. I assume that is correct?