The basis for the civil servant death benefit is the monthly gross salary or pension of the civil servant. As a result of the calculation, the descendants receive twice the monthly gross salary or pension as a death benefit. This is intended to cover the special expenses (e.g. funeral costs) following the death of the family member.
Proceedings: Taxation of the civil servant death benefit
The subject of the pending proceedings was the tax treatment of the civil servant death benefit. The plaintiff was an heir of the deceased mother (civil servant). After her mother's death, the plaintiff filed the application for the death benefit with the State of North Rhine-Westphalia. The State Office of North Rhine-Westphalia subsequently paid the death benefit to the heirs. However, the payment amount was reduced by the applicable income tax and solidarity surcharge. The reason for this was that the tax office regarded the payment amount as taxable income from employment (§ 19 EStG). The plaintiff, however, argued for a tax exemption under § 3 Nr. 11 EStG. The plaintiff initially prevailed before the fiscal court. The BFH has now ruled, however, that this constitutes taxable income from employment. Accordingly, a tax exemption under § 3 Nr. 11 EStG is only available for descendants in need of support.
Frequently asked questions
Frequently asked questions
How is the civil servant death benefit calculated?
The civil servant death benefit is based on the deceased official's monthly gross salary or pension payments. Surviving dependents receive twice the monthly gross salary or pension. It is intended to cover special expenses arising after death, such as funeral costs.
Is the civil servant death benefit subject to income tax?
Yes, according to the BFH ruling (Az. VI R 8/19), the civil servant death benefit qualifies as taxable income from employment under § 19 EStG. The payout is therefore reduced by income tax and the solidarity surcharge.
When does the tax exemption under § 3 Nr. 11 EStG apply to death benefits?
According to the BFH, a tax exemption under § 3 Nr. 11 EStG is only available for dependants in need of support. For heirs who are not in need of support, by contrast, the civil-service death benefit is fully taxable.
Who applies for the civil servants' death benefit and who pays it out?
The application for the death benefit is filed by the heirs or surviving dependants of the deceased civil servant with the competent State Office (Landesamt). Payment is made by the respective employing public authority (Dienstherr) — in the decided case, by the State of North Rhine-Westphalia via the Landesamt.
What was the procedural history in the BFH ruling VI R 8/19 on death benefits?
At first instance, the Finanzgericht (tax court) ruled in favor of the plaintiff heiress and treated the death benefit as tax-exempt under § 3 Nr. 11 EStG. However, the BFH overturned this decision, holding that the death benefit must be treated as taxable employment income under § 19 EStG.