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Retirement for Expats in Germany

Author: Jason Zhou
Submitted: October 2013

Unlike Spain or France, Germany is not a popular destination for expatriates to retire to. A major barrier is the difficulty to get a resident permit as Germany does not offer a retirement visa or similar.

If you are retired and would like to move to Germany you will need a visa, unless you are a citizen of a European Economic Area (EEA) country or Switzerland. To obtain a visa, other than routes such as marriage, you may like to apply for an investment visa. Unfortunately this category is only open to applicants under the age of 55, so some forethought may be required. If you receive such visa, you still need to wait three years to get the permanent resident permit. For further information, you can check the Ministry of Interior’s website here: https://www.bmi.bund.de or contact your local German Embassy.

If you are a German citizen and have retired in another country there are no restrictions on you returning to Germany. Before you move back it is best to make sure your pension can be paid to your German account smoothly. In some countries you should be able to arrange for the payment to be made to your German account regularly. Furthermore, you should note that your pension payments from foreign sources will be taxable in Germany with normal income tax rates applicable. Double tax agreements usually specify that tax is payable on pension benefits only in the country where the beneficial owner is resident. Hence benefits derived by a resident from a foreign pension scheme will be subject to taxation only in Germany.

In Germany, all employees (subject to certain exceptions such as students working during the holidays) are obliged to pay contributions into the state pension scheme.  If you are working in Germany and planning to retire in Germany, you should note that you may need to pay contributions until the age of 67. In 2013, the contributions are generally calculated as 18.9% of gross salary (19.6% in 2012) up to a maximum salary of €5,800 per month (€5,600 in 2012).

For example the maximum monthly contribution for 2013 is €1,096.20, payable as €548.10 by the employer and €548.10 by the employee. Further contributions are not required for the portion of the salary which exceeds this amount.

Health care is another major consideration. The health service in Germany is similar to the National Health Service (NHS) in the UK. If you are not a citizen of an EEA country or Switzerland, you will be required to have adequate medical insurance when you apply for a visa. Citizens of an EEA country or Switzerland should make sure to obtain a valid European Health Insurance card before entering Germany. This will enable you to have health services in Germany at a reduced cost or sometimes even free.  For more information about German healthcare, please see here https://www.bkk-bv-gesundheit.de/bkk-promig/fileadmin/template/download/Gesundheitswegweiser/Wegweiser_Englisch_2009.pdf.

Most people would like to maintain their pre-retirement standard of living. However, many of them find their savings will not last as long as they expect. For example, as stated in recent research from HSBC, UK retirement lasts about 19 years on average and financial problems are likely to emerge after 7 years. It is therefore recommended to have a detailed financial plan for retirement as early as possible.

 

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