Many pensioners move to Austria to live there permanently. However, anyone moving to the Alpine republic should pay attention to a few things.
With retirement, many people fulfill their long-cherished dreams – and more and more people are therefore deciding to spend the next phase of their lives abroad. According to a survey by the information portal pflege.de, around one in six Germans plans to move abroad when they retire.
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Figures from the German Pension Insurance (DRV) also confirm this: the DRV pays almost 231,000 pensions to German seniors who live abroad. Almost 126,000 pensioners stay in the area and move to an EU member state after their working life. These figures come from the DRV’s 2023 pension atlas.
First place among German pensioners: Austria
The number one destination country for German retirees is its neighbor Austria. Around 28,000 German seniors receive their pensions there. The metropolises of Vienna, Salzburg and Innsbruck are particularly popular. No wonder, after all, the management consultancy Mercer named Vienna the most livable city in the world in 2023. But the regions of Tyrol, Carinthia and the Salzkammergut also attract emigrants with their mountain backdrops and lakes. The Alpine country offers a standard of living that is comparable to that in Germany.
However, life there is more expensive. This becomes apparent when you do your weekly shopping. Foods such as meat, eggs and vegetables as well as cosmetic items cost significantly more than in Germany. According to the price monitor of the Austrian Chamber of Labor (AK), consumers pay an average of 24 percent more gross for comparable branded goods in Austria than in Germany. Net, i.e. without taking VAT into account, it is 21 percent more.
When it comes to health insurance, however, little changes for seniors when they emigrate to Austria. The two countries have signed a social security agreement. Accordingly, German health insurance remains valid in Austria. This applies to both statutory and private insurance. In order to be able to use medical services as usual, expats need proof of entitlement from their German health insurance company. Anyone who emigrates to Austria in old age can continue to receive nursing care benefit from the German nursing care insurance. However, care benefits in kind to finance an outpatient care service cannot be used in other EU countries and therefore also in Austria.
No double taxes
In order to prevent pensioners from having to pay taxes twice, Germany and Austria decided on another agreement at the turn of the millennium: the double taxation agreement. According to this, company and private pension benefits of German emigrants are only taxed in Austria, and the German tax authorities waive this. State German pensions and income from real estate in Germany, however, are not taxed as income in Austria, but in Germany.
German seniors who live in Austria continue to pay taxes in Germany, although they are considered to have limited tax liability in this country. This means that by moving abroad they lose important tax advantages, such as the basic annual tax allowance of around 10,000 euros. Without this allowance, you will have to pay more taxes on your pension than would be the case if you remained in Germany.
However, foreign pensioners who primarily receive income from Germany can apply for unlimited tax liability in order to avoid the disadvantages. You must submit the application to the Neubrandenburg tax office. Tax advisor Dirk Rott explains the advantages of this application in a YouTube video using an example: Peter, who has been retired since 2004, will receive an annual pension of 20,000 euros in 2022 and will receive annual income of 5,000 euros from a property in Germany.
The German pension insurance clarifies
After deducting his pension allowances and other costs, his taxable income is almost 17,000 euros. As a limited taxpayer, he would have to pay around 4,000 euros in taxes to Germany. By applying for unlimited tax liability, he can use the tax exemption and reduce his tax burden to just under 1,300 euros, since he only has income from Germany and does not earn any other income in Austria.
The DRV regularly offers consultation days in Austria for people who have already moved and have questions. Those interested can find the dates on the website.
Source: Stern
