How German pensioners in the Philippines can still keep the basic allowance

Many German retirees dream of spending their retirement under palm trees – for example, in one of the tropical properties of Majestic Empire Residences in the Philippines. Sun, sea, low cost of living – it all sounds perfect. But there can be a nasty surprise when it comes to taxes: Those who deregister in Germany and have their pension transferred abroad often lose their basic tax allowance and therefore pay significantly more taxes.

In this article, we explain how you can secure this tax allowance abroad – completely legally and without complicated detours.

Why the basic allowance is so important

The basic tax allowance is €11,604 per year in 2025. If you are subject to unlimited tax liability, this income is not taxed. If the basic tax allowance is eliminated, every euro of your pension is immediately taxed – and this can easily cost several thousand euros per year.

An example:

• With basic allowance: With a pension of €1,500 per month, you pay approximately €896 in taxes per year.

• Without the basic allowance: With the same pension, you pay approximately €2,520 in taxes per year. The difference: around €1,600 less in your pocket – every year.

  
  

How to keep the basic allowance even as an emigrant

1. Maintain residence in Germany

If you maintain an apartment in Germany that is available for use at any time, it is considered your residence for tax purposes. You don't have to be there permanently – the important thing is that the apartment belongs to you or is rented in your name. The advantage: You remain subject to unlimited tax liability and automatically enjoy the basic tax allowance.

2. Apply for unlimited tax liability (Section 1 (3) EStG)

Even without a residence in Germany, you can apply to the Neubrandenburg tax office to be treated as an unlimited taxpayer. This is possible if:

• At least 90% of your income comes from Germany, or

• Your foreign income is below the basic allowance (€11,604).

Advantage: You secure the basic tax allowance and often other tax benefits as well.

3. Use double taxation agreements

There is a double taxation agreement between Germany and the Philippines . It stipulates that statutory pensions are taxed only in Germany. In conjunction with the application under Section 1 Paragraph 3 of the Income Tax Act (EStG), this can mean that you can reduce your tax burden to a minimum.

Conclusion

If you're a German retiree emigrating to the Philippines, you shouldn't leave your tax situation to chance. With the right strategy, you can retain your basic tax allowance—and thus save a lot of money every year.

If you'd like to learn more about how to retire in a tropical paradise, visit us at Majestic Empire Residences . We offer not only dream properties but also valuable tips for a financially secure retirement.