{"id":4309,"date":"2025-11-12T10:08:29","date_gmt":"2025-11-12T09:08:29","guid":{"rendered":"https:\/\/livingandworking.eu\/?p=4309"},"modified":"2025-11-12T10:08:30","modified_gmt":"2025-11-12T09:08:30","slug":"partial-early-retirement-in-germany-everything-you-need-to-know-about-altersteilzeit-for-seniors","status":"publish","type":"post","link":"https:\/\/livingandworking.eu\/en\/2025\/11\/12\/partial-early-retirement-in-germany-everything-you-need-to-know-about-altersteilzeit-for-seniors\/","title":{"rendered":"Partial early retirement in Germany: everything you need to know about Altersteilzeit for seniors"},"content":{"rendered":"\n

Principle and models<\/p><\/path><\/svg><\/div>

\n

Germany offers a form of partial early retirement (Altersteilzeit), which allows employees to transition gradually into retirement. This scheme enables an employee who has reached the age of 55 and has at least 1,080 days (3 years) of mandatory insurance coverage within the five years preceding entry into the program to reduce their working hours by half until retirement.<\/p>\n\n\n\n

The mechanism is based on a voluntary agreement between the employer and the employee and is mainly available in two models:<\/p>\n\n\n\n

    \n
  • Equal part-time model (Gleichverteilungsmodell):<\/strong> The employee reduces their working hours evenly over the entire duration of the contract (for example, working half-time every day or week).<\/li>\n\n\n\n
  • Block model (Blockmodell):<\/strong> The contract is divided into two phases of equal length: the working phase<\/strong> (active phase), during which the employee works full-time as before, and the release phase<\/strong> (passive phase), during which the employee is fully exempt from work.<\/li>\n<\/ul>\n\n\n\n

    In both models, the salary is reduced by half (to correspond to the overall half-time), but the employer must pay an additional allowance (Aufstockungsbetrag) of at least 20% of the part-time salary (gross or net, depending on the agreement), ensuring an income level higher than simple half-time pay.<\/p>\n<\/div><\/div>\n\n\n\n

    Social security<\/p><\/path><\/svg><\/div>

    \n

    As a cross-border worker, social security coverage is determined by European social security regulations, which establish the principle of affiliation in the country where the professional activity is carried out, in this case Germany. Consequently, the employee continues to contribute to German social security schemes (health, pension, unemployment, long-term care) throughout the Altersteilzeit period, including during the release phase of the Block model.<\/p>\n\n\n\n

    The basis for calculating social security contributions differs depending on the type of remuneration:<\/p>\n\n\n\n

      \n
    • Reduced salary (theoretical half-time pay):<\/strong> Social security contributions apply normally to this reduced salary.<\/li>\n\n\n\n
    • Supplementary allowance (Aufstockungsbetrag):<\/strong> This amount, paid by the employer to compensate for lost income, is generally exempt from social security contributions (including pension), unless the part-time salary plus this supplement exceeds the previous full-time salary.<\/li>\n<\/ul>\n\n\n\n

      Important:<\/mark>
      A key aspect of the scheme is the preservation of pension rights. The employer is legally required to pay additional pension insurance contributions based on at least 80% of the former gross salary (up to the pension insurance ceiling). This rule applies in both phases, ensuring continuity of pension entitlements even during the release phase.<\/p><\/div><\/div>\n<\/div><\/div>\n\n\n\n

      Taxation of cross-border worker income under Altersteilzeit<\/p><\/path><\/svg><\/div>

      \n

      With the tax status of a cross-border worker:<\/h3>\n\n\n\n


      Under this status, regular salaries and similar remuneration earned in Germany are taxable only in the country of residence, in this case France. Therefore, the cross-border worker was taxed solely in France until entering Altersteilzeit. What happens afterward?<\/p>\n\n\n\n

      In the context of Altersteilzeit, this rule applies to both phases:<\/p>\n\n\n\n

        \n
      • Working phase (or Gleichverteilungsmodell):<\/strong> The remuneration received (reduced salary + supplementary allowance) is considered salary and is therefore taxable only in France.<\/li>\n\n\n\n
      • Release phase (Freistellungsphase):<\/strong> The income received during this period (which corresponds to deferred remuneration from the first phase) is treated as employment income and, in principle, remains taxable exclusively in France as income of residence.<\/li>\n<\/ul>\n\n\n\n

        Without the tax status of a cross-border worker:<\/h3>\n\n\n\n

        Taxation during the active phase<\/strong><\/p>\n\n\n\n

        The active phase is the period of actual work. The employee receives remuneration reduced to 50% of the former salary, plus an employer supplement of at least 20%. According to the Franco-German tax treaty, Germany retains the exclusive right to tax this income as the country of employment. The employer applies German withholding tax. The supplementary allowance is exempt from German income tax and social security contributions, but remains subject to the progression clause: it is taken into account to determine the tax rate applicable to other taxable income.<\/p>\n\n\n\n

        Taxation during the passive phase<\/strong><\/p>\n\n\n\n

        The passive phase (or release phase) is characterized by the cessation of all actual work. The employee continues to receive the same remuneration as in the active phase, legally considered salary as long as the contract is maintained. The tax treatment remains identical to the active phase: German withholding tax applies, and the 20% supplement is exempt under the progression clause.<\/p>\n\n\n\n

        Filing obligations in Germany and France<\/strong><\/p>\n\n\n\n

        Throughout Altersteilzeit, the employee is required to file an annual tax return in Germany. In France, as a tax resident, the employee must declare all worldwide income. However, under the treaty, Altersteilzeit income, already taxed in Germany, is exempt from French tax. It must still be reported for the calculation of the effective tax rate applicable to other French-source income.<\/p>\n<\/div><\/div>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":9,"featured_media":4298,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[231],"tags":[],"territories_categories":[147,148],"class_list":["post-4309","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-retired"],"yoast_head":"\nPartial early retirement in Germany: everything you need to know about Altersteilzeit for seniors - Eures Grande Region<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/livingandworking.eu\/en\/2025\/11\/12\/partial-early-retirement-in-germany-everything-you-need-to-know-about-altersteilzeit-for-seniors\/\" \/>\n<meta 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