The amount of lawyers’ contributions to the pension fund is not determined solely by freelance income, but also by other income and expense allowances from voluntary work.
Contributions to the pension fund are often a reason for legal disputes between lawyers and pension funds, particularly for employed lawyers and lawyers who are not doing so well financially. The standard compulsory contribution that lawyers must pay to the relevant pension funds is based on the maximum amount of the statutory pension insurance. If the lawyer’s income falls below the contribution assessment limit, a reduced contribution must be paid in accordance with the respective pension fund statutes.
Compensation for voluntary work as the basis for calculating contributions
In this specific case, the responsible pension fund had set the monthly contribution of an employed lawyer at EUR 37.09 per month. The pension fund assumed an annual income of EUR 2,393. This income consisted exclusively of expense allowances for the plaintiff for his work as a member and parliamentary group leader in the district council of an independent city.
Action for annulment against contribution notice
The lawyer concerned has filed an administrative court action against this decision, arguing that the expense allowances for his voluntary local political work do not constitute earned income. According to Section 30 of the statutes of the defendant pension fund, contributions to the pension fund are to be calculated on the basis of earned income.
Contribution rate taking into account all income?
From its point of view, the VG first clarified the terminology: According to Section 30 Paragraph 2 of the statutes of the pension fund in question, the contribution rate is to be calculated on the basis of the income earned from self-employment and the remuneration received in dependent employment. The regulation refers to the general regulations of the statutory pension insurance and thus adopts its definition of income. There is a conscious decision not to limit the regulation to specific activities (OVG NRW, judgment of June 22, 2010, 17 A 197/08).
Income from non-legal work
The connection to the concepts of remuneration within the meaning of Section 14 SGB IV and earned income according to Section 15 SGB IV means that all income from non-self-employed work is considered remuneration and from freelance or self-employed work is considered earned income. Whether the work is typical for a lawyer or not is irrelevant (OVG NRW, decision of March 2, 2011, 17 B 1505/10).
The terminology of income tax law is decisive
According to the relevant provisions of the Social Code IV, income is always to be considered as earned income if the income tax law classifies it as earned income. According to Section 2 Paragraph 1 Clause 1 No. 3 EStG, this applies to Income from self-employment and according to Section 18 para. 1 EStG also for Income from other self-employed workThe latter also included reimbursement of expenses for voluntary work (BFH, decision of 14 April 2011, VIII B 110/10).
The intention to make a profit does not have to be the main focus
The court was not convinced by the plaintiff’s legal opinion that voluntary work in local politics was carried out without the intention of making a profit and was therefore not self-employed within the meaning of Section 18 Paragraph 1 of the Income Tax Act. Case law has recognised that council members do their work primarily for political reasons and that the intention of receiving remuneration for this is secondary. However, to assume self-employed work, it is sufficient that the Profit-making intention Secondary purpose as expressly clarified in Section 15 Paragraph 2 Sentence 3 of the Income Tax Act for commercial income. The same applies to income from self-employment (BFH, decision of June 13, 2013, III B 156/12; OVG Münster, decision of August 20, 2020, 17 A 4414/19).
Identical terminology in social and income tax law
In the opinion of the court, the assessment of self-employment does not have to be made according to a specific social law perspective. The wording of Section 15 Paragraph 1 of the Social Code IV already shows that the tax classification is decisive for the assessment of income as earned income. The reasoning behind the law shows that a “full parallelism of income tax law and social security law both in the allocation to earned income and in the amount of earned income”. Differentiation would therefore not correspond to the will of the legislator (BSG, judgment of 25 February 2004, B 5 RJ 56/02 R).
Lawsuit dismissed
As a result, the Administrative Court dismissed the lawyer’s action to annul the pension fund’s contribution notice.
(VG Minden, judgment of 12.1.2024, 2 K 2771/21)
Background:
The case law on the classification of expense allowances from voluntary work is not uniform:
The Hessian LSG had assessed the voluntary work of a lawyer as a city councilor differently than the Minden Administrative Court. Reason: In voluntary work, there is typically no intention to make a profit. The motivation to participate in the political decision-making process in local self-government and to serve the common good excludes an intention to make a profit, even as a secondary purpose (Hessian LSG, judgment of March 17, 2022, L 1 KR 412/20).
In decisions from 2020 and 2022, the Social Court of Saarland and the Social Court of Detmold took the even more far-reaching view that voluntary work cannot be self-employed within the meaning of Section 15 (1) of the Social Code (SGB) due to the lack of an intention to gain employment and the lack of gainful employment (Social Court of Saarland, judgment of December 7, 2020, S 20 KR 85/20; Social Court of Detmold, judgment of March 31, 2022, S 32 KR 1498/20).
