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Incapacity pension abroad: What applies when moving to Spain

Responsible for this content: Frank Menze

Anyone receiving a German reduced earning capacity pension who wants to move permanently to Mallorca will quickly come across a sentence in the Social Code (Sozialgesetzbuch) that causes alarm: pensions for reduced earning capacity are only to be paid abroad under certain conditions. The topic of reduced earning capacity pensions abroad is therefore one of the most misunderstood subjects among German expatriates – because anyone who only reads this one provision arrives at the wrong conclusion. European law overrides the national restriction in the vast majority of cases. This guide explains step by step which provision regulates what, where the actual decisive point lies, what you need to inform the pension insurance provider of – and where this article deliberately avoids naming figures, because they cannot be reliably substantiated here.

Disability pension abroad: moving to Spain

Are you moving to Mallorca with a reduced earning capacity pension and want to know whether your payment is really secure?

The starting position: national law blocks, European law opens up

The reason for the uncertainty lies in the fact that two legal levels must be overlaid to reach the correct result. On one side stands the German Social Code with a restrictive rule for payments abroad. On the other side stands the European coordination regulation, which cancels out exactly this restriction for EU citizens in another EU country. Anyone who moves to Spain as a German-speaking pensioner or person with reduced earning capacity falls precisely into this second case – Spain is an EU member state, and the regulation has been in force since 1 May 2010.

The following sections work through the review chain in the order in which it actually applies: first the national restriction, then the opening clause within the same code, then the European provision that overrides the restriction, and finally the German Pension Insurance's (Deutsche Rentenversicherung) own interpretation of it.

The national restriction: § 112 SGB VI

§ 112 SGB VI is found in the section on benefits for eligible persons abroad and sets out a clear condition: a pension for reduced earning capacity is only paid to persons abroad if the entitlement exists independently of the respective labour market situation. For miners' pensions, there is the additional requirement that an entitlement must already have existed during the period of residence in the country.

This sounds harmless at first, but it hits exactly the constellation that occurs particularly often in practice: the so-called labour-market pension. This is the full reduced earning capacity pension that someone receives not because they are objectively unable to work more than three hours a day, but because the German part-time labour market is considered closed to their remaining capacity to work. It is precisely this entitlement that depends on the labour market situation – and would therefore, under § 112 SGB VI, actually not be payable if the recipient is resident abroad.

Please note:Anyone who searches for this one provision and stops there will mistakenly conclude that their full reduced earning capacity pension will be cut or stopped when moving to Spain. This is the most common misconception on this topic.

The opening clause in the same law: § 110 SGB VI

Before European law even comes into play, it's worth taking a look at § 110 SGB VI – because it already contains the crucial distinction that many guides skip over.

Paragraph Provision Practical significance for Mallorca emigrants
§ 110 (1) SGB VI For only a temporary stay abroad, benefits apply as if staying domestically A longer winter stay on Mallorca without relocating one's habitual residence changes nothing about pension payments
§ 110 (2) SGB VI For habitual residence abroad, the special provisions for beneficiaries abroad generally apply (including § 112) Anyone who permanently relocates their centre of life to Spain falls into this category
§ 110 (3) SGB VI The provisions of this section only apply insofar as supranational or intergovernmental law does not stipulate otherwise This is exactly where EU law comes in and supersedes § 112 SGB VI

In practice, this means: anyone planning only a longer stay on Mallorca without formally relocating their habitual residence is already in the unproblematic paragraph 1. Anyone who permanently emigrates, on the other hand, ends up in paragraph 2 – and needs paragraph 3 to understand why nothing is usually cut regardless. You can find more on distinguishing residence in the guide on tax residence and the 183-day rule – although that primarily deals with taxes, the fundamental question of habitual residence is related.

The bridge: Art. 7 of Regulation (EC) No. 883/2004 abolishes residence clauses

The central norm of European social law for this case is Art. 7 of Regulation (EC) No. 883/2004 on the coordination of social security systems. In essence, the provision states: cash benefits payable under the legislation of a Member State or under the Regulation itself may not be reduced, altered, suspended, withdrawn or confiscated on the grounds that the beneficiary or their family members reside in a Member State other than the one whose institution is liable for payment.

This is precisely the rule that overrides the residence proviso anchored in § 112 SGB VI for EU cases. The Regulation, in its current version, has applied to all EU member states – including Spain – since 1 May 2010.

Legal source Core statement Effect when resident in Spain
§ 112 SGB VI Reduced earning capacity pension abroad only for entitlements independent of the labour market Would block labour-market-dependent pensions under purely national law
§ 110 (3) SGB VI Supranational and intergovernmental law takes precedence Opens the door to the EU rule
Art. 7 Regulation (EC) 883/2004 Prohibition of residence clauses for cash benefits Overrides § 112 SGB VI in EU cases

The Deutsche Rentenversicherung confirms the result itself

The most solid evidence for this interplay comes not from a legal portal, but from the Deutsche Rentenversicherung itself: the Gemeinsame Rechtliche Anweisung (GRA) on Art. 7 of Regulation (EC) No. 883/2004 sets out, in essence, that pensions for partial reduced earning capacity, miners' pensions and comparable labour-market-dependent entitlements would, under national law, only be paid in the case of residence within Germany or where the entitlement is independent of the labour market – but that this restriction is precisely not applied due to the abolition of residence clauses. Persons covered by the Regulation therefore receive the pension regardless of whether the entitlement depends on the German part-time labour market or whether the payment entitlement would even arise for the first time abroad.

The GRA illustrates this with an example case: a person habitually resident in France can, due to their reduced capacity to work, only work a few hours a day and has therefore lost their job. Under § 112 SGB VI alone, the full, labour-market-dependent pension would not be payable in the case of residence abroad. Under Art. 7 of the Regulation, however, the entitlement to the full reduced earning capacity pension may precisely not be suspended merely because the person is habitually resident in another Member State. The GRA therefore explicitly concludes that the applicant can be paid the pension for full reduced earning capacity.

Note: The GRA presents this example explicitly using the case of France. However, the Regulation applies equally to all EU Member States, including Spain – applying it to a move to Mallorca follows the same legal logic.

Full pension due to a closed labour market: the practically most important case

One case is particularly relevant for those affected: the full reduced earning capacity pension that is paid in full solely because the German part-time labour market is considered closed for the remaining capacity to work (the labour-market pension). It is precisely in this constellation that many affected people, and even some advisers, suspect that moving abroad automatically leads to a reduction or cancellation. According to the Deutsche Rentenversicherung's own account, the opposite is true: the residence clause is abolished by Art. 7 of the Regulation, and the full pension remains in place.

Type of pension National basic rule (§ 112 SGB VI) Result in case of EU residence according to the DRV's GRA
Full reduced earning capacity pension due to a closed part-time labour market (labour-market pension) Only where the entitlement is independent of the labour market Still paid, residence clause no longer applies
Pension due to partial reduced earning capacity Only where entitlement is independent of labour-market conditions Covered by the same abolition mechanism
Miners' pensions Additionally: entitlement must already have existed domestically Special case, an individual review by the DRV is advisable here

Responsibility: Who reviews your case?

Which pension insurance provider is responsible for your specific application or ongoing payment depends on your individual insurance history. The Deutsche Rentenversicherung maintains corresponding liaison bodies for payments abroad and determines responsibility based on your file; an application sent to the wrong office is, in practice, forwarded within the pension insurance system. A blanket address or phone number for "the" responsible office in Spain cannot seriously be given – the most reliable route is via your previous pension insurance provider or directly via the Deutsche Rentenversicherung.

If you're already considering combining pension periods from Germany and Spain, it's worth reading the more detailed guide Applying for a pension in Spain, which explains the aggregation of insurance periods and payment into a Spanish bank account.

Your obligations to cooperate after moving

Even though the payment itself is protected under EU law, this does not exempt you from the obligation to report changes in your personal circumstances. This fundamentally includes notifying the Deutsche Rentenversicherung of a relocation of your residence abroad – this is part of the general cooperation obligations of pension recipients and must be fulfilled regardless of whether it ultimately changes the payment amount.

  1. Notify the Deutsche Rentenversicherung of a change of residence as soon as the move is confirmed.
  2. Check whether your stay actually qualifies as a permanent relocation of your habitual residence or as a temporary stay within the meaning of § 110 para. 1 SGB VI.
  3. Keep documents relating to the medical assessment of your reduced earning capacity ready in case the pension insurance provider has further questions during the process.
  4. If you're unsure how your situation should be classified, ask the Deutsche Rentenversicherung directly at an early stage, rather than relying solely on forums or general statements.

Note:Whether and at what interval the Deutsche Rentenversicherung requires a follow-up examination or renewed approval depends on the individual decision notice and its time limit. There is no blanket, officially published figure that this article could responsibly cite – what matters exclusively is your personal pension decision notice.

Additional income in Spain: reporting obligation remains

One point that's easily overlooked when moving: if you earn income alongside your reduced earning capacity pension, this income is subject to the same reporting obligations as additional earnings in Germany – regardless of whether the activity is carried out in Spain or elsewhere. The Deutsche Rentenversicherung offers its own calculator to check how additional income affects your ongoing pension. This guide deliberately does not state specific threshold amounts, as they change annually and cannot be reliably cited here with current figures – check them directly with the Deutsche Rentenversicherung before taking up any activity.

If you're considering becoming self-employed in Spain, it's worth also taking a look at the guide Autónomo in Spain – it covers the Spanish side of self-employment, not how it's counted towards German pension entitlements.

Taxes and health insurance: two separate matters

This guide deals exclusively with the question of whether and how your German incapacity pension continues to be paid if you relocate your residence to Spain. Two closely related but legally distinct questions are deliberately left open here, as they require separate assessment:

  • Taxation: Whether and to what extent your incapacity pension is taxed in Germany, in Spain, or proportionally in both countries under the Double Taxation Agreement between Germany and Spain is a separate question. You'll find an overview of the tax treatment of German pensions in Spain in the guide Taxing your German pension in Spain as well as in the overview of the Double Taxation Agreement between Germany and Spain. For your individual case, it's worth arranging an appointment with a specialised tax advisor in the business directory.
  • Health insurance: How you're covered by health insurance after your move needs to be clarified separately and depends, among other things, on whether you're already receiving a German state pension, are still working, or live solely off your incapacity pension. The guide to health insurance in Spain.

Most common mistakes when relocating with an incapacity pension

Mistake Why it happens Correct interpretation
Reading only § 112 SGB VI and inferring a reduction from it The provision appears in isolation in the statutory text § 110 Abs. 3 SGB VI refers to overriding EU law
Equating temporary and permanent stays Both concern "abroad", but have different effects § 110 Abs. 1 (temporary) is clearly distinct from Abs. 2/3 (permanent)
Not notifying the DRV of a change of residence The pension "automatically" keeps being paid, after all The duty to cooperate applies regardless of the payment outcome
Assuming that additional income earned in Spain is "invisible" No German employer reports it automatically Reporting obligation applies equally to additional earnings at home and abroad
Confusing the tax question with the pension question Both concern the same pension Payment and taxation are legally separate matters

Checklist before moving with a reduced earning capacity pension

  • Keep the pension notice, time limitation and medical documents together in full.
  • Clarify whether the planned stay is a temporary one (§ 110 para. 1) or a permanent one (§ 110 para. 2/3) within the meaning of SGB VI.
  • Inform the Deutsche Rentenversicherung of the change of residence early and proactively.
  • If you plan to earn additional income in Spain, check in advance with the Deutsche Rentenversicherung's additional earnings calculator whether and how it will be counted.
  • Clarify the tax treatment of the pension separately with a tax advisor specialised in Germany-Spain matters.
  • Organise health insurance cover for the new place of residence before the move, not afterwards.
  • If in doubt about jurisdiction, ask the Deutsche Rentenversicherung directly instead of relying on forums.
  • In cases of legal doubt, consult a contact from the Law & Finance directory.

What happens afterwards?

After the move, your reduced earning capacity pension remains continuously linked to the Deutsche Rentenversicherung – changes in your state of health, your income, or renewed queries from the pension insurer are possible and must be answered just as with a domestic residence. Whether and when a follow-up examination or a decision on continued payment is due depends solely on your individual notice; a universally applicable deadline for this cannot be credibly stated here. At the same time, you should keep an eye on your tax and health cover at your new place of residence, as both can develop independently of the pension payment itself – for example, if your residence status or your income changes.

Conclusion

A reduced earning capacity pension abroad is no cause for concern when moving to Spain, provided you understand the correct order of examination: § 112 SGB VI alone would block the so-called labour-market pension in the case of residence abroad, but § 110 para. 3 SGB VI opens the door for overriding European law, and Art. 7 of Regulation (EC) No. 883/2004 specifically lifts this residence clause. The Deutsche Rentenversicherung expressly confirms this outcome in its own legal interpretation – including for the full pension paid solely because the German part-time labour market is closed to you. Two other matters remain open for you as someone moving abroad: the tax treatment of the pension and your health insurance at the new place of residence. Both should be clarified in parallel, but separately from the pension question.

Official sources

Will my disability pension be reduced if I move permanently to Mallorca?
Generally, no. § 112 SGB VI would restrict the so-called labour-market pension in the case of residence abroad, but Art. 7 of Regulation (EC) No. 883/2004 lifts this residence clause for EU cases, which the Deutsche Rentenversicherung confirms in its own legal interpretation.
What is the difference between a temporary and a permanent stay abroad?
Under § 110 (1) SGB VI, a merely temporary stay abroad does not affect pension payments. Only once your habitual residence is permanently relocated abroad do the special provisions under § 110 (2) and (3) SGB VI apply.
Does this also apply to the full disability pension I receive solely because of the closed labour market?
Yes. According to the Joint Legal Directive (Gemeinsame Rechtliche Anweisung) of the Deutsche Rentenversicherung, precisely this so-called labour-market pension continues to be paid despite the wording of § 112 SGB VI, because Art. 7 of the EU Regulation lifts the residence clause.
Do I have to notify the Deutsche Rentenversicherung of my move?
Yes. Relocating your residence falls under your general duties of cooperation and must be reported regardless of whether it ultimately changes the amount paid.
Do I have to report additional earnings in Spain to the pension insurance?
Yes. Additional earnings in Spain are subject to the same reporting obligations as in Germany; you should check the specific thresholds in advance using the Deutsche Rentenversicherung's additional-earnings calculator (Hinzuverdienstrechner).
Will my pension still be taxed if I live in Spain?
This is a separate matter not covered here, governed by the double taxation agreement between Germany and Spain. Read the separate guide on pension taxation or consult a specialised tax adviser.
Does my health insurance change because of the move?
Yes, this needs to be clarified separately and depends, among other things, on whether you are already receiving an old-age pension or living solely on the disability pension. Sort this out before the move, not after.
Who is responsible if I have questions about my specific case?
Which institution is responsible depends on your individual insurance record; the Deutsche Rentenversicherung determines this and, if necessary, forwards applications internally. A single, generic contact point for Spain cannot seriously be named.