Tax return: Which insurance policies are tax-deductible and how you can benefit
27.04.25
9
Minutes
Katrin Straub
Managing Director at nextsure
Many people do not know that numerous insurance contributions can reduce their tax burden. Find out here which insurance policies you can claim in your tax return and how to go about it to save real money. This article shows you the most important deductible policies and the associated maximum amounts.
The topic in brief and concise terms
Contributions to basic health and long-term care insurance are generally fully tax-deductible and take precedence over other miscellaneous precautionary expenses.
Insurance taken out for professional reasons (e.g. professional indemnity insurance) can be claimed in full as employment expenses or business expenses.
For other precautionary expenses (e.g. private liability, accident insurance), maximum amounts apply (€1,900 for employees, €2,800 for self-employed people), which are often already reached by health and long-term care contributions.
Overview: These insurance categories are relevant for tax purposes
As a general rule, deductible insurance policies can be divided into three main categories: retirement provision expenses, work-related expenses and retirement pension contributions. Each category has its own rules and upper limits to observe. Correct classification is crucial for maximising tax savings.
The most important facts at a glance
Before we go into the details, here are the key points on the deductibility of insurance:
Contributions to basic health and long-term care insurance are often fully deductible.
Liability insurance policies (private, motor vehicle, pet owner) count as other retirement provision expenses.
Work-related insurance policies such as professional indemnity or legal expenses insurance for employment law can be claimed as work-related expenses.
Upper limits apply to other retirement provision expenses: 1,900 euros for employees and 2,800 euros for self-employed persons.
Retirement pension contributions (e.g. Rürup pension) are deductible up to an annual maximum amount, which is 27,565 euros for 2024.
This distinction helps you better assess the potential of your insurance expenses. In the following sections, we will look at each area in more detail.
Provision expenses: Claim health and insurance costs for tax purposes
Provision expenses include all insurance policies that serve your personal protection and health care. These include, in particular, contributions to health and long-term care insurance. You can generally deduct the basic cover of your statutory or private health insurance as well as statutory long-term care insurance in full. This also applies to contributions for co-insured children and spouses. These are entered in the Vorsorgeaufwand annex.
Other provision expenses, which are deductible within the maximum amounts of one thousand nine hundred euros (employees) or two thousand eight hundred euros (self-employed), include:
Private liability insurance
Motor vehicle liability insurance
Pet owners' liability insurance
Accident insurance
Term life insurance
Occupational disability insurance (as a standalone policy)
Unemployment insurance
Supplementary health insurance (e.g. dental supplementary insurance) and supplementary long-term care insurance, provided the maximum amounts have not already been exhausted by the basic health and long-term care contributions.
It is important to know that contributions to basic health and long-term care insurance often already use up the entire maximum amount for other provision expenses. Nevertheless, you should declare all relevant insurance policies. Find out more about where insurance policies are entered. The next category concerns insurance policies related to professional activities.
Work-related expenses: Deduct professional insurance premiums without limit
Insurance policies that have a clear professional connection can be claimed as employment-related expenses (for employees) or business expenses (for the self-employed). The major advantage: There is no upper limit for employment-related expenses, unlike with pension expenses. Every euro that exceeds the employee flat-rate allowance of one thousand two hundred and thirty euros (as of 2024) reduces tax liability.
Typical insurance policies that can be claimed for work purposes are:
Professional liability insurance: essential for many professions such as doctors or architects.
Employment legal expenses insurance: the costs attributable to the professional element are deductible.
Professional accident insurance: premiums for purely professional accident policies are fully deductible; for mixed policies, often fifty per cent.
Account management fees for a pure salary account can also be claimed on a pro-rata basis.
An accident insurance policy can also be tax-deductible if it covers occupational risks. For mixed policies that cover both private and occupational risks (e.g. legal expenses insurance with employment legal expenses cover), the professional portion must be certified by the insurer and itemised separately. Next, we will look at the tax treatment of retirement provision products.
Retirement provision expenses: plan for later and save tax today
Contributions to certain retirement provision contracts can also be claimed for tax purposes and fall under the category of retirement pension expenses. This includes, in particular, contributions to the statutory pension insurance scheme and to so-called basic pension contracts (Rürup pension). For the year 2024, one hundred per cent of these contributions can be deducted as special expenses up to a maximum amount of EUR 27,565 for single people (EUR 55,130 for married couples). For employees, the tax-free employer contribution to pension insurance is deducted from this maximum amount.
A special case is the Riester pension. Contributions to this are entered in Annex AV. The tax office automatically checks (favourability test) whether the special expenses deduction or the state allowances is more advantageous. The maximum special expenses deduction for Riester contracts is EUR 2,100. A unit-linked pension insurance policy may also offer tax advantages in certain circumstances. Contributions to occupational pension provision (bAV) financed through salary conversion are already made tax-free by the employer and do not need to be declared separately in the tax return. Now on to the insurance policies that are generally not deductible.
Non-deductible insurance policies: These policies are excluded
You cannot deduct all insurance policies from tax. In general: pure property insurance policies or policies without any direct provision-related or professional character are usually not tax-relevant for tax purposes. These include, for example:
Contents insurance (exception: proportionately for a home office used for work).
Private comprehensive motor insurance (by contrast, motor liability insurance is deductible as a provision expense).
Pure travel luggage or trip cancellation insurance.
Pet health insurance (exception: guide dogs or therapy dogs).
Mobile phone or electronics insurance.
Endowment life insurance policies taken out from 1 January 2005 onwards (older policies taken out before 2005 may still be deductible in some cases).
It is important to check carefully which of your insurance policies meet the criteria for tax deductibility. An hearing aid insurance policy could, in certain circumstances, count as an extraordinary expense. In the next section, we provide expert tips on the optimal design.
Expert depth: legal provisions, judgements and structuring tips for maximum savings
For tax-efficient use of your insurance expenses, detailed knowledge is helpful. The relevant provisions can be found in the Income Tax Act (EStG), in particular Section 10 EStG for special expenses. The Citizens' Relief Act has fundamentally improved the deductibility of health and long-term care insurance contributions. Our expert tip: Keep all insurance records and contribution invoices carefully, even if the tax office does not always request them immediately. Proof must be provided upon request.
In the case of occupational disability insurance (BU), the tax treatment is complex. Contributions to a self-standing occupational disability insurance policy (SBU) are deductible as other provision expenses within the maximum limits. However, these maximum limits are often already used up by health and long-term care insurance contributions. A private occupational disability pension is taxed only on the income element in the event of a claim. A more tax-attractive option can be the combination of occupational disability supplementary insurance (BUZ) with a basic pension (Rürup pension). Here, the total contributions (Rürup + BUZ) can be claimed as retirement provision expenses up to the higher maximum rates, provided the BUZ portion does not account for more than forty-nine per cent of the total contribution. You can also find more information about direct insurance with us. Also think about travel health insurance, which is often deductible.
Also note recent judgments by the Federal Fiscal Court (BFH), which may, for example, concern the apportionment of mixed insurance contracts. Professional advice can be worthwhile here in order to make full use of all options. nextsure offers you a comprehensive analysis of your insurance situation.
To make the theory more tangible, let us consider a few examples. Suppose an employee has annual contributions to basic health and long-term care insurance of four thousand euros. This already clearly exceeds the maximum amount for other deductible insurance expenses of one thousand nine hundred euros. Further policies such as private liability insurance (one hundred euros) or accident insurance (two hundred euros) then no longer reduce tax, but should still be declared.
A self-employed person pays six thousand euros annually for their basic health and long-term care insurance. Their maximum amount is two thousand eight hundred euros. Here too, further other insurance expenses are generally no longer deductible. However, if they have professional indemnity insurance for three hundred euros, they can deduct it in full as a business expense. If they also pay five thousand euros into a Rürup pension, these are deductible as retirement provision expenses. Correct allocation and making full use of the respective maximum amounts are crucial. Correctly declaring a private liability insurance policy for tax purposes is a first step. The exact calculation of your tax savings depends on your individual marginal tax rate. With our digital portal, we help you keep track.
Your path to the optimal tax return with nextsure
The tax deductibility of insurance policies offers significant savings potential, often amounting to several hundred euros per year. A careful review of your policies and the correct declaration in your tax return are essential for this. Use the distinction between pension contributions, work-related expenses and retirement provision expenses to your advantage. Bear in mind that contributions to basic health insurance and long-term care insurance are usually fully deductible, and professional insurance policies are often recognised without limit as work-related expenses.
At nextsure, we understand that insurance and tax law can be complex. As your digital insurance portal, we not only offer you tailored insurance solutions, but also support you with in-depth expertise. An overview of which insurance and taxes are connected is often the first step. Our aim is to give you clarity and confidence in your financial and insurance matters.
Request an individual risk analysis now: Have your insurance situation reviewed free of charge and receive specific recommendations for optimisation.
More useful links
The Federal Ministry of Finance provides information from the wage tax handbook that is relevant to income tax.
The German Pension Insurance offers a brochure with information on tax law for insured persons and retirees.
Your pension provision explains how Riester contributions can be claimed for tax purposes.
The Finanzamt.NRW provides information on the tax treatment of contributions to health and long-term care insurance.
Wikipedia offers a comprehensive article on special expenses in German tax law.
FAQ
Can I deduct my contents insurance from my taxes?
Generally, contents insurance cannot be deducted for tax purposes, as it is classed as property insurance. An exception applies if you have a home office that is recognised for tax purposes; in that case, the proportionate premium for the area of the office can be claimed as employment expenses or business expenses.
Are contributions to term life insurance tax-deductible?
Yes, contributions to term life insurance can be claimed for tax purposes as other provision expenses within the applicable maximum amounts (EUR 1,900 for employees, EUR 2,800 for self-employed persons).
How are contributions to occupational disability insurance treated for tax purposes?
Contributions to an independent occupational disability insurance policy (SBU) can be deducted as other precautionary expenses, provided the maximum amounts have not already been exhausted by health and long-term care insurance contributions. A combination with a Rürup pension (basic pension with BUZ) can be more tax-efficient, as higher deductible amounts apply here for retirement provision expenses.
What proof does the tax office require for claimed insurance contributions?
Normally, you do not have to submit the supporting documents directly with your tax return (retention of supporting documents requirement). However, the tax office may request evidence such as insurance contribution certificates or proof of payment (e.g. bank statements). It is advisable to keep these documents for at least the duration of the objection period.
What is the difference between provision expenses and income-related expenses for insurance?
Provision expenses serve to provide private cover (e.g. health, long-term care and liability insurance) and are deductible only up to certain maximum amounts. Work-related expenses are costs incurred for professional reasons (e.g. professional liability insurance, employment legal expenses insurance) and can usually be deducted in full without limitation, provided they exceed the employee flat-rate allowance.
Can premiums for supplementary dental insurance be claimed as a tax deduction?
Yes, contributions to dental supplementary insurance can be claimed as other deductible insurance expenses in your tax return. However, this only applies if the maximum amount for other deductible insurance expenses (€1,900 for employees or €2,800 for self-employed persons) has not already been used up by contributions to basic health and long-term care insurance.
