My husband was killed in Afghanistan – can Germany tax my SBP benefits?

The Survivor Benefits Plan is another way to secure financial stability for the surviving spouse in case an active duty member of the US Military dies while on active duty or after retirement. Since Military retired pay stops upon death of the retiree, the SBP allows a retiree to ensure, after death, a continuous lifetime annuity for their dependents.

The SBP is similar to the DIC. However, DIC can – without additional premiums like the SBP – also be paid to any Veteran who dies of a service-related injury or disease.

It is hence not uncommon that somebody is eligible for both benefits – SBP and DIC. Until not too long ago, this double dip was prohibited by US law and certain off-setting mechanisms were put in place. As an example, in 2022, when DFAS was informed by the VA that a spouse annuitant was receiving DIC, the law required that DFAS deduct one-third of the amount of DIC received from the amount of SBP payable and pay the remaining amount of the SBP to the annuitant. This was called the SBP-DIC Offset. During the Global War on Terrorism lawmakers realized the injustice in this and tried to mitigate by implementing the Special Survivor Indemnity Allowance (SSIA). The SSIA was an additional cash benefit to offset the earlier offset. On January 1, 2023, the offset was completely eliminated, which meant SSIA also went away. Eligible surviving spouses now receive their full SBP and their full DIC payments.

For you as a receiving Survivor the above means that if your husband was killed in action, the SBP, DIC and (until recently) SSIA benefits will likely be completely tax free in Germany. If your husband died of a condition or disease which might be linked to his time in a combat zone, it is harder to prove the war-connex after retirement. However, we have been successful here as well.

Please let us know if you are collecting SBP benefits and feel like your current advisor or the German tax office are mishandling them. We are happy to make sure the Germans are not unjustly benefiting from your sacrifice.

The short way to your taxperts

Instantly secure your taxpert services through their client portal – complete all necessary procedures with just a few steps.

Experts guidance

Reserve your 20-minute consultation with Georg or Marcel for effective assessment. Clarify your questions and understand the cross-border taxes with cloud-based services for €125.