In addition to the proper calculation and payment of company pensions, the legislature obligates the provider of the company pension scheme – the so-called “paying agencies” – to withhold social security contributions and taxes accruing on company pension schemes, and to pay them to the statutory health insurance funds or tax authorities.
For these tasks, the agencies participating in this process
- Paying agency
- The company pensioner’s statutory health insurance fund
- Tax office for the place of business (the tax authority assigned to the paying agency)
- Federal Central Tax Office
- Pension insurance data authority
- Central Allowance Authority for Pension Assets
exchange data electronically via officially prescribed data sets and transfer provisions.
These are the procedures, separated according to tax and social security:
- Machine inquiry process for the identification number (MAV)
- Electronic wage-tax deduction criteria (ELStAM) procedure
- Electronic wage-tax return
- Electronic wage and tax statement
- Benefit period reporting procedure
- Machine query insurance number
- Electronic contribution statement
- Electronic paying agency reporting procedure
The electronic reporting procedures are introduced below with their respective contents:
Machine inquiry process for the identification number
In order for the pensioner indicated in the reporting procedure to be correctly assigned, it is necessary to have their tax identification number. If the paying agency doesn’t have this information, it can be obtained from the Federal Central Tax Office (BZSt) through the machine inquiry process (MAV).
Electronic wage-tax deduction criteria (ELStAM) procedure
The fiscal authority is responsible for developing and modifying electronic wage-tax deduction criteria, such as tax class, allowance and religious affiliation – as well as for making them available electronically. The relevant data is managed by the Federal Central Tax Office via the ELStAM database.
The paying agency is legally obliged to register the company pensioner with the fiscal authority and to request their ELStAM. After the latter are retrieved, it is mandatory that they be used for the wage-tax deduction. Some changes, such as the tax class change, are made available electronically by the fiscal authority through ELStAM modification lists no later than the fifth business day of the following month.
Electronic wage-tax return
The calculated wage and church tax values, as well as the solidarity tax, are to be withheld by the paying agency, reported to the responsible tax office for the place of business, and paid to this office on schedule.
As a rule, the period for which the wage-tax must be reported electronically amounts to one month and always runs through 10th day of the following month.
The withheld wage tax, solidarity tax, and church tax is to be paid in one amount to the tax collections department at the tax office for the place of business no later than the 10th day following the lapse of the period for declaring wage tax (Sec. 41a Par. 1 Sentence 1 No. 2 EStG).
Electronic wage and tax statement
A wage account is to be maintained for every company pensioner and every calendar year. In addition to the company pensioner’s personal data and wage tax deduction criteria, this contains the tax and social security law-related deductions, the allowances, and the net pension (the required data is defined in Sec. 4 and Sec. 5 of the Payroll Tax Regulation as well as Sec. 8 of the Contribution Scheme Regulation).
Upon termination of a benefit period or at the end of the year, the paying agency has to close the company pensioner’s wage account and, due to the records stored within it, transfer an electronic wage and tax statement to the fiscal authority no later than the end of February of the following year in accordance with the officially prescribed data set.
Benefit period reporting procedure
For company pensioners in the company pension scheme plans, whether it be a pension fund or direct insurance, neither wage, church, nor solidarity tax are calculated and paid. With respect to tax, the legislature classifies the benefit period for these plans as “miscellaneous income” (Sec. 22 Income Tax Act) that is not handled through the provider, but between the pensioner and finance authorities as part of the income tax assessment.
This is why, in order to assure a complete and appropriate taxation of company pensions, the paying agencies are obligated to annually transfer the benefits – electronically, in the form of a benefit period report – through the end of February of the year that follows the year of the benefit period to the Central Allowance Authority for Pension Assets (ZfA). The bases for the information in the benefit period report are Sec. 22a Income Tax Act and Sec. 93 c of the General Fiscal Law.
Machine query insurance number
Analogous to the “machine inquiry process for the identification number,” the company pensioner’s insurance number is necessary for them to be correctly assigned within the social security electronic procedure. Should this not be known at the paying agency, it can be requested electronically via the pension scheme data authority (Sec. 28a Par. 3a Social Security Code IV).
Electronic contribution statement
The paying agencies are legally obligated to issue a contribution statement and submit it electronically for every calculation period and statutory health insurance fund through which your company pensioners are insured through you.
The contribution statement contains a detailed overview of the company pensioner’s contribution amounts for health and nursing insurance for every health insurance fund. The declared sum must be paid by the paying agency to the respective health insurance fund.
Statutory deadlines are to be observed for the payment. The contributions must be received by the respective health insurance fund no later than the second to last banking day of a month. As early as two working days before then, the respective electronic contribution statement must be transferred per electronic report to the respective health insurance fund.
The bases for the reporting procedure are the Data Acquisition and Transfer Regulation (DEÜV), the Common Principles for the Data Acquisition and Transfer Regulation for Social Security in accordance with Sec. 28b Par. 1 Social Security Code IV as well as the Contribution Scheme Regulation.
Electronic payment agency reporting procedure
The paying agency procedure is a reporting procedure between the statutory health insurance funds and the paying agencies. It ensures that the health and nursing contributions accruing in company pensions are collected in full, and correctly.
In paying agency procedures, the paying agency for the pensioner’s health insurance fund reports first-time approval, the amount, every change as well as the termination of a company pension.
Based on these reports, the health insurance fund determines the maximum scope of the obligation to contribute to health and nursing insurance. This may involve considering existing additional income that one is obligated to pay contributions from, such as statutory pensions and other related benefits. Through this, the paying agency learns whether and at what amount the respective company pension is liable to contribution, and pays the contributions to the health insurance fund.
The obligation to implement the paying agencies procedure arises from Sec. 256 Social Security Code. The reporting obligations for the paying agencies and health insurance funds are described in Sec. 202 Social Security Code V.
If you would like to learn how we can help you with the calculation of company pensions, then please get in touch with our expert Thomas Dietsch, senior business developer.
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