What types of insurances are tax-deductible?
It isn’t generally known that costs for various types of insurances (Versicherungen) can be deducted from your taxes. This doesn’t apply to all types - typically only to those with personal insurance or insurance for occupational/vocational training requirements. Property insurance is also non-deductible as it doesn’t serve for your personal care or education and it is not required for professional reasons.
Insurances for health care & income security
- Health insurance (Krankenversicherung)
- Liability insurance (Haftpflichtversicherung)
- Accident insurance (Unfallversicherung)
- Occupation disability insurance (Berufsunfähigkeitsversicherung)
- Pension insurance (Rentenversicherung)
Insurances for occupation & education
- Labor law protection insurance (Arbeitsrechtsschutz)
- Professional liability insurance (Berufshaftpflichtversicherung)
- Property insurances (Sachversicherungen)
- Home contents insurance (Hausratversicherung)
- Motor vehicle protection policies (Kfz-Kaskoschutz)
- Building/Bicycle/Luggage insurance (Gebäude-, Fahrrad-, Reisegepäckversicherung)
- Travel cancellation insurance (Reiserücktrittsversicherung)
How to deduct your insurance costs
There are two types of insurances that can be deducted: insurance that covers occupational risks and insurance that covers private risks. Insurances for occupational risks, such as professional liability insurance, accident insurance, and labor law policies must be deducted as income-related expenses (Werbungskosten), while insurances that cover private risks must be deducted as special expenses (Sonderausgaben).
Insurances that are deducted as special expenses include:
- Statutory pension insurance, unemployment insurance, health insurance, and nursing care insurance
- Private health and nursing care insurance
- Professional disability insurance
- Motor vehicle insurance
- Liability insurance (also pet liability insurnace)
- Term life insurance
- Life insurance
- Defense insurance (Rechtsschutzversicherung)
- Travel health insurance
- Riester Pensions
Note: There are some cases where an insurance policy covers both occupational and private risks and can therefore not be easily divided into two categories. This is sometimes the case with legal defense insurance (Rechtsschutzversicherung) - a small part of it is dedicated towards labor law insurance (Arbeitsrechtsschutz). When being written off on your tax return, part of the insurance costs would be proportionately divided between income-related expenses and special expenses.