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Pensioners in Germany: How to receive an energy relief payment

Your €300 payment may come with a tax catch. Here's what you need to know.

Published: 26 October 2022 17:39 CEST

A person types on a calculator.

A person calculating their taxes. Photo: picture alliance/dpa/dpa-tmn | Christin Klose

Come December, pensioners living in Germany will receive a €300 relief payment from the government to help alleviate rising heating and energy costs.

The payment itself will be automatically deposited into pensioner bank accounts through payments from their regular pension funds – with the aim of keeping payments as quick and unbureaucratic as possible.

But there may be tax implications later.

That’s because the €300 energy relief payment is taxable. If you already have income above the exempted amount in Germany and have to submit a tax return anyway, this €300 payment simply gets added to your taxable total. But if the payment pushes you above the exempted amount, you’ll have to file a tax return.

READ ALSO: Five last-minute tips for your German tax return

Will I have to file?

Unfortunately, that’s not an easy answer.

First, you have to determine which part of your pension is taxable.

That depends on what year you retired. For people who retired in 2005 or before, only 50 percent of their pension income is taxable. That increases two percent every year later. So someone who retired in 2006 will have to pay on 52 percent of their pension income, until the current year 2022. Retirees from this year have to pay tax on 82 percent of their pension income.

By 2040, 100 percent will be taxable – although the current government plans to extend this to 2060.

Once you’ve figured out the taxable portion of your pension income, add the €300 energy relief payment in full to that amount. Yes – in full – as no part of the €300 is tax-free. Once you add any other sources you may have on top of that, such as investments if you have any, and then deduct any credits, you’ll get your total taxable income.

In 2022, if that’s above the €10,347 basic allowance, you’ll need to file a tax return on whatever amount exceeds the basic allowance.

The current government has plans to raise this allowance in 2024 though, to apply to the 2023 tax year.

READ ALSO: German tax-free allowance ‘set to rise’ amid record-high inflation

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How much do you need to earn to qualify for citizenship in Germany?

Out of the requirements for qualifying for a German passport, supporting yourself financially is one of the most important – and one of the most confusing.

Many foreigners assume that the authorities have a magic number in mind and will often worry about whether their income is above or below this threshold.

In reality, though, the law is much more flexible. In section 10 of the nationality law, it states that applicants must show that they “can support themselves and their dependent family members without claiming benefits under the Second or Twelfth Book of the Social Code.”

In other words, that your income is healthy enough to not rely on the state for things like long-term unemployment benefits.

According to Fabian Graske, an immigration lawyer at Migrando, around €1,500 gross per month for a single person is usually considered enough to live on.

That said, there isn’t really a one-size-fits-all approach to this quesiton.

When it comes to working out if your income is high enough, you’ll need to take into account a number of factors that your case worker at the naturalisation office will also weigh up.

That’s why it’s important to ask yourself a number of questions that go beyond just how much you earn:

How high are your living costs?

In Germany, there are huge regional differences in the cost of living, so what someone can afford to live on varies hugely from place to place.

For example, someone living in pricey Munich is likely to need much more money for rent or their mortgage than a resident of much more affordable places like Halle or Leipzig, so you should consider whether what you earn is enough to offer a basic standard of living in the city or town you live in.

READ ALSO: Requirements, costs and permits – 6 essential articles for German citizenship

It is worth mentioning, though, that what you actually pay for rent and bills matters more than the averages. If you’re lucky enough to find an apartment with unusually low rent in Berlin, for instance, you can probably get away with earning less money as well.

Are you single or do you have a family?

If you’re single and have no children, you’ll likely get a lot more lenience from the authorities when it comes to having a lower-than-average income.

A family sit at a lake.

A family sit at a lake in Bavaria. Image by Eva Mospanova from Pixabay

Of course, if you have dependents such as kids or a spouse who doesn’t work (or both), you’ll need to ensure not only that your own living costs are taken care of, but also that your family can survive on your income alone.

That naturally means you’ll be expected to earn a certain amount more for each dependent child or adult.

On the plus side, any income your spouse does earn will be counted alongside your own, so if you’re the one who is supported by their partner, the authorities will also take this into account.

Is your job stable or unstable?

One key thing to think about when applying for citizenship is the security of your work contract. Someone who has a long-term contract with an employer and has passed their probationary period will be in a much better position than someone who is still on a three-month trial, for example.

This doesn’t mean you shouldn’t submit a citizenship application after just starting a new job, but be aware that the authorities may well wait to process your application until you’ve passed the initial probation and have been put onto a longer-term contract.

A similar rule of thumb applies to people who are currently claiming Arbeitslosengeld I (ALG I), or unemployment insurance. Though this doesn’t disqualify you from citizenship, it may delay your application until you can find a stable job.

READ ALSO: Can I still get German citizenship after claiming benefits?

Do you need to rely on welfare payments to get by?

A key aspect of German naturalisation law is working out whether you’re likely to be a financial burden on the state by relying too much on the welfare system.

The entrance to the Jobcenter in Düsseldorf,

The entrance to the Jobcenter in Düsseldorf, North Rhine-Westphalia. Photo: picture alliance/dpa | Oliver Berg

While everyone needs a helping hand from time to time, claiming benefits like long-term unemployment benefit (Bürgergeld) or housing benefit (Wohngeld) to top up your income sadly shuts you out of the naturalisation process and could also make it hard for you to qualify in the future.

Luckily, this doesn’t apply to all types of state support – Kindergeld, ALG I and Bafög don’t count, for example – so seek advice from a lawyer or your local citizenship office if you’re unsure.

How old are you?

Though this is hard to fully quantify, age can sometimes play a role in assessments of your financial fitness in Germany.

A young person fresh out of university or vocational college may be seen as someone with high earning potential over the years, so in some cases the authorities may take a more relaxed approach to their current income.

In contrast, an older person coming to the end of their working life could be held to slightly stricter standards.

This is also why it can be important to show that you have sufficient pension contributions or another form of security for the future, such as owning your own home or having lots of savings.

READ ALSO: How can over 60s get German citizenship under the new nationality law?

What counts as ‘income’ under German law?

It’s important to note that income doesn’t just have to mean the salary you get at your job: income from rental properties, side hustles and freelance gigs can also be included, as well as things like alimony payments after divorce.

Once again, if you’re unsure, just ask. The citizenship offices are there to advise you and should give you clear instructions about what kind of documents count as proof of income in your application.

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