Insurance and tax: How to optimise your tax burden smartly
09.05.25
7
Minutes
Katrin Straub
Managing Director at nextsure
Did you know that many of your insurance contributions can reduce your tax burden? Every year, millions of Germans lose out on cash because they do not declare all deductible insurance policies in their tax return. Find out here how to optimise your finances and which insurance policies you can claim, and how.
The topic in brief and concise terms
Many insurance contributions such as health, long-term care, liability and accident insurance premiums can be deducted for tax purposes as special expenses or business expenses.
For other provision expenses, maximum amounts apply (EUR 1,900 for employees, EUR 2,800 for self-employed persons); basic health and long-term care insurance contributions are also fully deductible.
Retirement provision expenses (e.g. a Rürup pension) have been deductible at 100% since 2023 up to a maximum amount of €27,566 (single people, 2024).
Understanding the basics: Which insurance policies are tax-relevant?
Many insurance contributions can reduce your tax burden by being claimed as special expenses or employment expenses. In principle, the tax authorities distinguish between personal provision expenses and insurance costs related to work. Personal provision expenses primarily include policies that serve to protect your own health and future. These include, for example, contributions to health and long-term care insurance, which are generally recognised in full for basic cover. Accident and liability insurance can also often be claimed. For employees, there is a maximum amount of 1,900 euros for other personal provision expenses; for the self-employed, it is 2,800 euros. Insurance taken out for professional reasons, such as professional liability insurance, can instead be deducted as employment expenses or business expenses. This distinction is crucial for correctly reporting your tax return and maximising your tax savings. In the next section, we will look at the maximum amounts in more detail.
Maximising Savings Potential: Maximum Amounts and Deductibility in Detail
The amount of deductible insurance contributions is limited by maximum amounts, which vary depending on professional status. For employees, civil servants and pensioners, the maximum amount for other retirement provisions is €1,900 a year. Self-employed people who bear their health insurance contributions in full themselves can claim up to €2,800. Important: contributions to basic health and long-term care insurance are recognised in full even if they exceed these maximum amounts. In such cases, however, there is no room left to deduct any further other retirement provisions, such as private personal liability or accident insurance. Contributions to retirement provision, such as the statutory pension insurance scheme or the Rürup pension, have been 100% tax-deductible since 2023, up to a maximum of €27,566 for single people in 2024. A correct tax return is worth real money here. Next, you will find out exactly where to enter these expenses.
Practical guide: How to correctly declare insurance on your tax return
The correct entry of your insurance contributions in your tax return is crucial for recognition by the tax office. Most retirement-related expenses belong in the Pension Expenses appendix. For example, contributions to statutory health and long-term care insurance are entered in lines eleven to thirteen of the Pension Expenses appendix. Separate lines are provided for private health and long-term care insurance. Contributions to other miscellaneous retirement-related expenses, such as liability or accident insurance, are entered from line forty-eight onwards. Insurance policies related to your profession, such as income protection or accident insurance with a professional component, belong as employment-related expenses in Appendix N (for employees) or as operating expenses in the EÜR appendix (for self-employed persons). A term life insurance policy is also declared in the Pension Expenses appendix as a miscellaneous retirement-related expense. The following list shows typical entry locations:
Health and long-term care insurance (basic): Pension Expenses appendix, lines 11ff.
Private personal liability insurance: Pension Expenses appendix, line 48ff.
Motor third-party liability insurance: Pension Expenses appendix, line 48ff.
Accident insurance (private portion): Pension Expenses appendix, line 48ff.
Income protection insurance (self-employed): Pension Expenses appendix, line 45 (as of 2023). [3ää]
Term life insurance: Pension Expenses appendix, line 50 (HUK24). [5]
Retirement provision contributions (e.g. Rürup): Pension Expenses appendix, lines 4-10. [3:-]
Our expert tip: Collect all annual premium statements from your insurance policies throughout the year so you do not forget anything when completing your tax return. Many insurers issue annual certificates containing all relevant data. Now on to the specific rules for certain types of insurance.
Special cases in focus: From pension planning to dental supplementary insurance
Besides standard insurance policies, there are a few special cases with their own tax rules. Contributions to retirement provision, such as the Riester pension, are treated separately and entered in Annex AV. [6ä|>--] The Rürup pension (basic pension) counts as retirement provision expenses and is tax-deductible as special expenses up to a maximum amount of twenty-seven thousand five hundred and sixty-six euros (single persons, two thousand and twenty-four). [4|ä-] An occupational disability insurance policy can be deducted as other provision expenses, provided the maximum amount of one thousand nine hundred euros or two thousand eight hundred euros has not yet been exhausted by health and long-term care insurance contributions. [1ä:-] Contributions to supplementary dental insurance can also be claimed as other provision expenses, subject to the aforementioned maximum amounts. [2ä:ö2025|] For motor vehicle liability insurance, the same applies. [2ä:ö2025|] Please note the following points for special insurance policies:
Risk life insurance: Contributions are deductible as other provision expenses, although the maximum amount has often already been reached. [2:&-]
Travel health insurance: Can be deducted as other provision expense, if it serves basic cover. [4?-]
Endowment life insurance policies (old contracts before 2005): Contributions may still be deductible under certain circumstances. [6ä|>--]
Private pension insurance policies (old contracts before 2005): Similar rule as for endowment life insurance policies. [6ä|>--]
These details show how important it is to carefully review your own insurance situation. Below, we look at the legal basis and current developments.
Understand legal frameworks and recent rulings
The tax deductibility of insurance contributions is regulated in the Income Tax Act (EStG), in particular in Section ten. [2§10--] This section defines special expenses, which include retirement provision expenses. Since 2010, the Citizens' Relief Act has brought about significant changes, especially regarding the deductibility of health and long-term care insurance contributions. [1:ä-] Current rulings by the Federal Fiscal Court (BFH) can also influence tax treatment, for example in distinguishing between taxable and non-taxable benefits. [3?–-ü] For example, the BFH has ruled that reimbursements from insurers for loss of earnings, including the income tax attributable to them, must be taxed as related income. [2-:-] It is advisable to stay up to date with legislative changes and relevant court rulings, as these can directly affect your own tax situation. A private life insurance policy is also subject to specific tax regulations. The complexity makes it clear when professional advice is advisable.
Avoid errors and unlock optimisation potential
When declaring insurance contributions in your tax return, it is easy to make mistakes that cost you real money. A common mistake is forgetting deductible insurance policies or assigning them incorrectly to the categories of special expenses or business expenses. Make sure you can provide the relevant evidence for all claims made, such as premium invoices or insurers’ certificates. [5ö-] The tax office does not always request these directly, but it may ask for them if in doubt. Another point is the correct allocation of contributions that cover both private and professional risks, such as accident insurance or legal expenses insurance. [2ää?-] Here, the professional proportion must be calculated correctly and claimed as business expenses, which often leads to greater tax savings than claiming it as a special expense. [6ä|-] Review your policies annually and adjust your tax return if necessary. The Direct insurance has its own tax implications. To make the most of all opportunities, individual advice can be useful.
The tax-efficient optimisation of your insurance contributions can be complex and depends heavily on your personal life and income situation. While this article provides a good overview and initial approaches, professional advice can often reveal further, specific savings potential. This is especially worthwhile if you have several insurance policies, are self-employed or use particular retirement provision products such as a unit-linked pension policy. At nextsure, we not only help you choose the right cover, but also provide guidance as part of our advice on how to structure your insurance in the most tax-efficient way. Careful planning and correctly declaring your insurance can reduce your tax burden by several hundred euros each year. Take advantage of this opportunity and do not leave any money unclaimed with the tax office. The next step is putting it into practice.
Your path to tax savings: Next steps and contact
You now have gained a comprehensive insight into the topic of insurance and tax. The first step towards optimisation is the careful collection of all relevant insurance documents from the past year. Using the information provided here, check which contributions you can claim and where these should be entered in your tax return. Make use of the maximum amounts and flat-rate allowances to your advantage. Remember that, for example, contributions for a personal liability insurance are also tax-deductible. If you are unsure or dealing with more complex situations, such as the tax treatment of a life insurance payout, do not hesitate to seek support. A well-prepared tax return is the key to maximum savings. Request your individual risk analysis now: Have your insurance situation reviewed free of charge and receive specific optimisation suggestions.
More useful links
The Federal Ministry of Finance provides comprehensive information on tax topics in Germany.
The Federal Statistical Office provides data and facts on income, consumption and living conditions in Germany.
The Consumer Advice Centre provides information on important aspects of money and insurance to empower consumers.
The German Pension Insurance provides detailed information on Riester pension insurance and retirement provision.
The Federal Ministry of Health provides official information on contributions and regulations for health insurance.
On the Gesetze im Internet platform, you can find the full text of the Income Tax Act, including Section 10 on special expenses.
Haufe offers specialist articles and information on tax topics, such as the deductibility of insurance contributions as business expenses for employees.
FAQ
Which insurance policies are generally tax-deductible?
In principle, contributions to health and long-term care insurance (basic cover), unemployment insurance, liability insurance (private, pet owner’s, motor vehicle liability), accident insurance, occupational disability insurance and term life insurance can be deducted as precautionary expenses. Contributions to retirement provision (e.g. statutory pension, Rürup pension) are also deductible. Profession-related insurance policies (e.g. professional liability insurance) can be claimed as income-related expenses.
Where do I enter my insurance contributions in my tax return?
Most pension expenses are entered in the "Anlage Vorsorgeaufwand". Profession-related insurance belongs as business expenses in the "Anlage N" (for employees) or as operating expenses in the "Anlage EÜR" (for self-employed persons). Contributions to the Riester pension are recorded in the "Anlage AV". [5,6ä|-]
Are there maximum amounts for tax-deductible insurance premiums?
Yes, for other provision expenses (e.g. liability insurance, accident insurance), a maximum amount of EUR 1,900 applies to employees and EUR 2,800 to self-employed persons. However, contributions to basic health and long-term care insurance are also deductible in full beyond this. For retirement provision expenses (e.g. Rürup pension), a maximum amount of EUR 27,566 applies for 2024 (single persons). [4,4|ä-]
Can I deduct car insurance from tax?
Yes, contributions to motor vehicle liability insurance can be deducted by employees as other precautionary expenses. Self-employed persons can, under certain circumstances, also claim contributions to comprehensive insurance as business expenses if the vehicle is used for business purposes. [1-ä-,3--]
What is the difference between special expenses and work-related expenses for insurance?
Special expenses are private outgoings for provision (e.g. health or liability insurance) that are tax-advantaged. By contrast, income-related expenses (for employees) or operating expenses (for self-employed persons) are costs incurred for professional reasons (e.g. professional liability insurance, the professional share of accident insurance). Income-related expenses reduce income from the respective activity and can often be deducted in full without limit, whereas special expenses are usually subject to maximum amounts.
Do I need proof for the tax office for all insurance policies?
Although you no longer need to submit the supporting documents with your tax return as standard, you should carefully keep all premium invoices and certificates from your insurers. The tax office may request these as part of an audit. For contributions already shown on the wage tax certificate (e.g. statutory health insurance), separate proof is usually not required. [5ö-]
