Tax advisor and pension specialist: what makes collaboration on company pension schemes work

Hardly any decision on occupational pensions in a German SME is made without the tax advisor, and rightly so. Especially for shareholder-managing directors, the tax and legal structuring determines whether a pension arrangement is recognised for tax purposes or becomes a problem. This article describes what the division of labour between the tax firm and the pension specialist looks like in practice, how the coordination works in concrete terms, and what clients and firms gain from it.

Why company pensions touch two disciplines

A pension commitment to a shareholder-managing director is two things at once. It is a matter of tax and corporate-law structuring: appropriateness of total remuneration, the period over which the commitment must be earned, exemption from the prohibition on self-dealing under Section 181 of the German Civil Code (§ 181 BGB), shareholder resolutions, documentation. And it is a matter of pension engineering: choice of funding vehicle, carrier solution, plan and investment design, ongoing support over decades.

Nobody covers both credibly on their own. The firm knows the client's figures, the balance sheet and the scope for structuring. I bring the pension engineering, from designing the commitment through to implementation and ongoing support. The best solution emerges when both sides work together early and in writing, not when a finished policy is placed on the firm's desk for review after the fact.

To be clear about my role: I work as a tied insurance agent acting for ERGO Beratung und Vertrieb AG. I provide neither tax nor legal advice; that assessment rests exclusively with the firm. This clear separation is not a drawback; it is the basis of a clean delineation of liability: each side is accountable for its own field.

The division of labour in detail

The assessment sits with the firm. This includes the tax appraisal of the commitment and, for the route via the reinsured Unterstützungskasse (a German support-fund pension vehicle), notably the deductibility of contributions as business expenses under Section 4d (1) no. 1c of the German Income Tax Act (§ 4d Abs. 1 Nr. 1c EStG), the balance-sheet effect, the appropriateness review of total remuneration, and the corporate-law points from shareholder resolutions to the exemption under Section 181 of the German Civil Code (§ 181 BGB). The same applies to the integration into the client's annual accounts and ongoing tax planning.

The pension arrangement sits with me. This covers the design of the commitment, the selection of the appropriate funding vehicle, the carrier and plan design including the question of how the reinsurance cover is invested, the statutorily required advice documentation, and the implementation and ongoing support, including an annual review of the arrangement.

What makes this division binding is putting it in writing. Every recommendation, every assumption and every open review point is set out in a document both sides know. That way it remains clear later who decided what, and on what basis.

How the coordination works in practice

• Initial consultation with the client. Clarify the starting position and the pension target, and check suitability at a high level: age and earnings position of the GmbH, tenure as managing director, time horizon to retirement.
• Key-terms paper for the firm. A compact basis for decision-making, containing the substance of the planned commitment, the intended contribution level, the statutory anchors and the specific review points that belong with the firm. It goes there before any implementation.
• Assessment by the firm. The firm reviews, adds to and adjusts the paper. Implementation starts only once this feedback is in. Without the firm's sign-off, I do not set up a managing-director pension arrangement.
• Implementation and annual review. After set-up, the arrangement is kept under review: does the contribution still fit the remuneration, are there changes among the shareholders, is there a need to adjust? Relevant changes go back through the firm.

What firms and clients gain from it

The client gets a coordinated solution instead of two isolated ones. The tax questions are clarified and documented before implementation, not only at the next tax audit. That is the difference between a pension arrangement that holds up and one that triggers disputes.

For the firm, the managing-director pension is an advisory opportunity with substance. It deepens the client relationship without the firm having to place products itself or get into the pension engineering. The process is predictable: prepared documents, named review points, bundled queries. And the roles stay cleanly separated, including for liability purposes.

Honesty is part of the job: not every case is suitable. A young GmbH without a reliable earnings position, a managing director shortly before retirement, or a pension target that the insurance-based routes already cover are situations in which I say so plainly. A collaboration only holds if both sides apply the same standard in dealing with the client.

Frequently asked questions

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Further reading

• The Unterstützungskasse for shareholder-managing directors: balance-sheet-neutral provision beyond the statutory contribution assessment ceiling
• Direct insurance or Unterstützungskasse: comparing the funding routes

Do you advise clients for whom a managing-director pension is on the agenda, or would you like to talk through the coordination process in concrete terms? I look forward to a conversation between professionals, in Berlin or online. Book a conversation

This content is general information and no substitute for individual advice. Tax structuring is carried out in coordination with the client's tax advisor.