Luxembourg Complementary Pension Scheme - Vested Rights

Hello, I moved to United Kingdom in July, 2023, and prior to that I was working in Luxembourg. During the time I worked in Luxembourg, my previous employer (Private Business) and I made contributions under a Complementary Pension Scheme in Luxembourg. As a result of my move out of Luxembourg, I have the option to liquidate my vested rights in the scheme - the amount only comprises of the contributions made by previous employer and myself. Could you please let me know whether I have to i) Declare the amount received in FY22/23 Tax declaration and/or ii) Pay UK Taxes on the amount received In context of the payment received, my situation falls under Article 17 Paragraph 2 of 2022 UK-Luxembourg Double Taxation Convention and protocol. Thank you

Hi,

Article 18 of the UK / Luxembourg double taxation agreement, advises that as a resident of the UK, you will be taxable in the UK on the pension withdrawal in Luxembourg.  

UK-Luxembourg 1967 Double Taxation Convention (consolidated version)

As this is a foreign pension, you would need to declare it in a Self Assessment Tax Return on SA106 in the tax year the pension payment arises.

Thank you.

Hi, Thank you. Can you please clarify whether the above would change as of FY24-25? I thought the new double-taxation treaty is effective the new FY. Secondly, this is voluntary withdrawal from the Complementary Pension Scheme and and usually withdrawal is allowed after change in job, but isn’t obligatory. The payment does not arise in any particular year but is up to the individual to withdraw. I still have not withdrawn it. Can you confirm whether the declarations & payment is still needed? Thank you,

Hi Paul

The new tax treaty was signed 7 June 2022.  Please have a look at Article 17: Pensions.  
We can only provide general information/guidance in this forum.  
For an answer to a detailed question of this nature, you would need to contact our self assesment helpline on 0300 200 3310 or contact our webchat facility at Contact HMRC.  
Article 18 of the UK/Luxembourg tax treaty covers pensions.  

Thank you

Hi, I have a similar interest as I moved from Luxembourg to UK and can withdraw my 2nd pillar pension. My question is about this text in the treaty "Notwithstanding the provisions of paragraph 1, pensions and other similar remuneration (including lump-sum payments) arising in Luxembourg and paid to a resident of the United Kingdom shall be taxable only in Luxembourg, provided that such payments derive from contributions paid to or from provisions made under a complementary pension scheme by the recipient or on his behalf and to the extent that these contributions, provisions, or the pensions or other similar remuneration have been subjected to tax in Luxembourg under the ordinary rules of its tax laws." Since 2nd pillar pension is already tax during contributions, does this mean withdrawal is the pension shouldn't be tax in the UK? Reference link about 2nd pillar pension xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Hi,
The updated treaty confirms - Regarding second pillar pension scheme, the Treaty provides that pensions and other similar remuneration (including lump-sum payments) arising in Luxembourg and paid to a UK resident will be taxable only in Luxembourg, provided that such payments derive from contributions paid to or from provisions made under a complementary pension scheme by the recipient or on his behalf and to the extent that these contributions, provisions, or the pensions or other similar remuneration have been subjected to tax in Luxembourg under the ordinary rules of its tax laws.
Thank you.