October 11th, 2019 / Insight posted in

Are you a UK resident receiving income from a German pension?

The provisions in the Germany-UK tax treaty regarding German pension income for UK residents may be helpful to some people who paid into a German pension for over 15 years.

Generally, UK resident individuals pay UK income tax on all their worldwide income. People who receive pension income from previous employers in other countries therefore pay UK income tax on that income. It is then up to them to make a claim for double tax relief. As well as being administratively burdensome, this may also lead to paying tax at a higher rate of tax than would be desired, because the higher tax rate of the two jurisdictions would be the amount ‘suffered’.

Under the Germany-UK double tax treaty, if the following conditions apply, pension income paid to a UK resident will only be taxable in Germany:

The pension relates wholly or partly to pension contributions which were, for more than 15 years, either:

  • Not part of taxable income from employment in Germany or
  • Tax deductible in Germany or
  • Tax relieved in some other way in Germany

These provisions do not apply if:

  • Germany does not effectively tax the pension
  • Germany has already clawed back tax relief for the contributions paid
  • The ’15-year condition’ is fulfilled in both Germany and the UK

These provisions are in Article 17(3) of the Germany-UK double tax treaty.

German social security pensions are not taxable in the UK.

In all cases, as well as considering the UK taxation implications of receiving income from an overseas pension, the other jurisdiction’s requirements must be met.

Double tax treaties are not affected by Brexit.

If you need advice on German pension income then we would be pleased to discuss how we can help you.