scook17

Members
  • Content count

    68
  • Joined

  • Last visited

Community Reputation

4 Neutral

About scook17

  • Birthday May 01

Profile Information

  • Location Munich
  • Nationality British
  • Gender Male
  • Year of birth
  1. British rental property income taxation rules

    Hmm, I wonder what happens post brexit regarding UK property rental. As of the end of 2020, the UK is EU no more....   
  2. Riester Rente vs. other pension schemes

    Coming from the UK, we have a self invested pension plan system (SIPP). This allows you to hold shares directly, funds, cash and some other things. At retirement (from 55 to 57 currently), you can buy an annuity or move to drawdown. An annuity seems to be the ONLY option in Germany. Basically give your pension to an insurance company in exchange for paying you back some percentage of this each year. The percentage is not set by you, but according to average life expectancy. Drawdown by comparison allows you to draw whatever percentage you decide upon each year.   According to  https://www.mpg.de/13326414/lower-pension-shorter-life guys can expect to live between 19 and 15 years past retirement at age 65, depending on how well you retire.   Now given this statistic, which I will round up to 20 years, that's basically 5% a year for someone retiring having a good income in retirement. If I am expecting to beat the average, well add a few years, and if not, subtract some.   If I assume a pension pot of 100K (easy math) then 5% is 5000 Euros a year, over 20 years available with drawdown. Now in 20 years, if I use  https://www.bankofengland.co.uk/monetary-policy/inflation/inflation-calculator from the UK I see I £5000 of goods in 1999 cost £8730 in 2019, an average of 2.8% per year inflation over 20 years. I will assume a similar inflation outlook for the next 20 years.   If I use  https://www.noelwhittaker.com.au/resources/calculators/retirement-drawdown-calculator/ And put in 2.8% indexation rate, and a 0% growth rate (assume the sum is in cash at retirement), the 100K figure allows me to pay out 3000 per year, indexed, for 24 years 4000 per year, indexed, for 19 years 5000 per year, indexed, for 16 years   If I use check24 to make a 15 year contribution of 555 Euros (555 x 180 payments = 100K) to a Rurup pension I get a guaranteed annuity of 3222 per year. Now the insurance company will assume some % growth rate, and average the life expectancy, some 19 years. Comparing with the 4000 per year figure, that's 80.5% of that figure, or a little under 20% profit for the insurance company.   Is there anything in Germany where you can do any of the following? 1. Use drawdown instead of being forced to by an annuity? 2. Put money away for a pension and deduct this in some way from you tax bill, as the income is deferred, but not get screwed in either annual charges or annuity charges? 3. Ideally have that money remain in cash. Plain old deposit account with the bank type of cash. Pay it to me when I retire, either monthly or annually for N years? 4. If not in cash, then in shares directly, but not in funds. I am happy to pick my own share portfolio.   In the UK too we had this old annuity system, but they finally reformed it some years back. I wonder what are the options here.  
  3. UK rental income on German tax returns

      So does the same apply to the German pension system? If you retire to another EU country, The Canary Islands for example, do you have to pay tax on the first Euro of income from a German pension? What if you were to retire to somewhere outside the EU, the UK being a good example, assuming it doesn't negotiate some deal here.
  4. Claiming back home-office expenses on tax return

    If you file jointly, do you get 2 x 1250 Euros allowance, or it's only claimable once?
  5. UK SIPP

    I think quite a few UK people own SIPPs. I wonder how they are taxed in Germany come retirement? I would guess, they are subject to UK income tax and the gross pension income gives rise to provision in Germany. Thus if the total pension+other income is under the personal allowance rate in Germany (9408 Euros as of 2020 for a single person) I would guess it would make no difference? I would also presume, that any dividend income on the shares inside the SIPP would also need to be included somehow in the German tax return.
  6. Pension from Germany and UK

    Does anyone know what happens with the UK vs German system, regarding payments vs contributions? As Gary points out, the UK pension is based on 35 years of meeting some minimum threshold of contributions. For each year of the 35 contribution years, you get 1/35th of the total amount payable as a state pension. Thus 1/35th of £168.60 = £4.81 a week or around £250 a year.   Yet the german pension is based on what percentage of average earnings you contributed in a given year. Thus the CEO/high income earners pay much more, but receives much more in retirement. The low wage earning cleaner, by comparison, is pays what seems like quite a lot, but gets in return a pittance to live on in retirement.   If a UK person retires in the EU, say Germany, does the UK still pay it's state pension at the same rate as before? If say you have 35 years in the UK pension system and 5 in the German one, would you both the UK £168.60 per week AND the German xxxx Euros?
  7. Solar Panels as a freelancer

    Having recently built a house, I opted for a solar panel solution, and was told it was beneficial to a freelancer. Well,...   1. I could claim the MWST of the system in the first year. Good. 2. The cost minus MWST is claimable as 'depreciation' overy 20 years, so basically 5% of the remaiing cost a year as a deduction against 'income' from the solar system. 3. After 9 months, and a new meter, I finally got it registered and I have to 'sell' electricity to the grid. 4. Any electricity sold is not just refuned, no that would be too easy and encourage people to have solar. No, it's paid as income, meaning something like a third to half is colllected as taxes due to German's marginal tax rates AND i have to complete a special extra tax form on the annual tax return.   I finally, 2+ years in, this year I started getting regular payments from the electricty company, which cover about a third of the actual electricity bill. With the 'depreciation' and the accountant's bill for the extra form I will make a loss this year, and for the next 17 years! I am wondering how this loss is treated for taxes. Can I offet this against my freelance income, or only against the income from the solar system?    
  8. Health insurance costs during early retirement

    No one answered this question. Let's sat at 40, it's 400 Euros. How much is the 65 year old paying?
  9. Home office deduction

    I think the maximum deduction possible is 1250 Euros, although, like most limits, this may change over time. I believe you have to split annual the rent by the area of the workspace, so it depends on the percentage the workspace makes of the total living space. The tax advisor should be able to work out the total amount for you, and tell you of any special rules for an 'office/workroom'. So for example, no wardrobes, was one rule I was told about.  
  10. Working in Germany for a foreign company

    To quote from a subsection of the article:   " In 2007 it was 21.32 percent of all notices that ended in finding employment, compared to 47.01 percent in 2014. The trend continues to rise significantly. This finding can only be rationally explained by the fact that the Deutsche Rentenversicherung is increasingly declaring self-employed persons to be self-employed. "   So to put it another way, the DRV is finding more creative ways to class freelancers as employees and now classifies around half of freelance contracts as bogus.
  11. Equity Release Scheme

      I wonder why this is not popular? In the case of a rising house price market, this is a guaranteed return for an investor. Worse case they have to remove the 'old' house and rebuild, so the value is minimum the land value.   At least in the UK, as a house owner, in comparison to a renter, you get screwed in terms of being counted as having assets which you are forced to give to the nursing home to pay for nursing care. Had you just rented all your life and spent that mortgae money on holidays, you can simply claim poverty. In such cases, I can entirely understand why older people would cash in the value of the property whilst they were alive.   In Germany, you have to pay for nursing case as part of the social taxes, so maybe this is not so much of an issue, but I assume you get stung by inheritance taxes or the like.
  12. Build your own house

    And if you have a family the KFW bank are very helpful https://www.kfw.de/inlandsfoerderung/Privatpersonen/Neubau/index-2.html   Basically it takes ages to get approval for your own build. Your are VERY lucky if you manage to find anywhere to build on, in/around the popular cities. You need cash/motgage IN PLACE before you can even consider buying the land. It will consume ALL of your spare time for 2-3 years.   But in the end, I think, a lot better than renting.
  13. Claiming back UK state pension contributions

    Anyone know what is the tax situation with regard to paying voluntary contributionsto the UK pension scheme? Are they a 'pension deduction' in Germany?   With Britian leaving at the end of the month, I guess the option for voluntary contributions will close soon. At least until then, Britian is an EU member. For £720 quid, you get 1/35th of the current £168.60 per week state pension. That works out at an extra £4.81 per week for £15 quid a week total contribution. So just over 3 years contribution gets you 65 to NN years benefits, depending how long you live. Seems a good deal to me if you plan on living 3 years past retirement.   I think the max is 7 or 8 years or missing contributions. So £720 x 7 = £5040 x 1.1 = 5544 Euros. Isn't there some limit on pension contributions? Does Germany even count contributions to another EU state pension system?
  14. Tax on interest earned in German bank/s

      Panda, I love this graph. Thank you. I have seen it before, but it's the clearest explaination I have found of the real tax rate you pay here in Germany. Basically, take your income on the X axis and you get the effective tax rate by using the turquoise line on the Y axis. If you are an IT guy like me, you will likely earn more than 50K, so you are in the 42% bracket for any income above 50K.   However, coming to the question posted here, about the 25% tax free rate. It appears to me, if you earn 20K or more, paying the 25% flat rate means you pay less tax. So my question to the forum, is how to convert earned income to a flat rate tax, for example to at least max out the 801 Euro allowance? Obvious answer is stick it in the bank and get 0.1% interest (a guess at the rate). Let's say 1% to make the math easy. To get 801 Euros a year as interest at 1% then I need 100 times the amount, so 80K Euros at 1% = 800 Euros in interest. I would be better off taking the 80K and dropping it into my 2.5% mortgage in terms of raw returns. The 1% doesn't really cover the 'real' inflation rate we all pay when taking into account the actual cost of rent/mortgage.   I am curious, a more general question to those in the know. How do people pay this 25% rate? Do they buy company shared which pay dividends, buy company/goverment bonds, lend money via P2P lending? How do people really manage to make use of this 25% rate? Surely not the 80K in the bank route?  
  15. bAV - Have I got the right end of the stick?

    Thank you Starshollow!  That looks a really interesting card. I don't yet see how it's non cash benefit, but I will take a more details look at it later.