Individual taxation—how to optimize your tax burden

Spouse A is primarily responsible for childcare and running the household, while Spouse B provides for the family’s livelihood. As they have joint parental custody, both spouses are entitled to half of the family allowance. However, since Spouse A has no income, she cannot claim it on her taxes. Nevertheless, Spouse B can only claim his half of the family allowance on his tax statement.

Both spouses are employed. However, Spouse A works part-time and consequently has a lower taxable income. Spouse B makes contributions from his income into Spouse A’s Pillar 3a account. For tax purposes, however, the deduction is always attributed to the person in whose name the account is held, regardless of who financed the contribution.

Due to Spouse A’s low taxable income, the Pillar 3a deduction only has a minor impact. From a tax perspective, it may therefore be sensible to refrain from making further contributions to Spouse A’s Pillar 3a account for the time being. This could be offset through a retroactive contribution in the future, when Spouse A has a higher taxable income.
 

When Spouse A retires, she receives the benefits from her pension fund, partly as a monthly pension and partly as a lump sum. In terms of property law, the lump sum generally belongs to Spouse A, although different allocation rules would apply in the event of a divorce.

To optimize their tax situation, Spouse A could transfer half of the lump sum to a joint account. In this case, the assets and income generated would be attributed to both spouses on a 50/50 basis for tax purposes.

Both spouses decide at short notice to retire early and withdraw their full pension fund balance as a lump sum in the same calendar year, rather than receiving a pension. While pension funds withdrawn in the same calendar year were previously aggregated and thus taxed at a higher rate, under individual taxation they are taxed separately.

Spouse A has inherited a property in her name (land registry entry). Spouse B has no assets of his own. As a result of the inheritance, the spouses take out a joint mortgage, for which they are both jointly and severally liable. The mortgage is therefore attributed to each spouse in equal shares. Spouse A can deduct half of the mortgage from her taxes. Spouse B could also claim his half of the mortgage for tax purposes. However, as Spouse B has no other assets, this has no tax implications in this instance.

Spouse A received an investment property as an advance on her inheritance, subject to a lifelong right of use (usufruct) in favor of the mother. According to tax law, the person with the right of use (beneficiary of the usufruct) is liable for tax on both assets and income. For income and wealth tax purposes, therefore, the property is attributed to the mother. The mortgage on the house is held in the names of both spouses as joint and several debtors. Until now, the mother has paid debt interest on the mortgage, enabling her to claim interest and debt deductions for tax purposes. However, under individual taxation, the deduction is now based on the debt agreement, meaning the couple must declare the mortgage (with each spouse paying half). This deduction would be ineffective if the spouses had no other assets, however.

To optimize their tax situation, the mother could waive her right of use so that Spouse A can be taxed on her assets. This would enable Spouse A to claim half of the mortgage for tax purposes. Spouse B could also claim his half, but in the absence of personal assets this would have no tax effect.