Tax on German pension

I am receiving a very small pension from the German tax authorities for the 18 months I lived/worked there in the mid '70's (44 Euros a month), does anyone know if this is taxed at source or whether whilst declaring it on my self assessment that I will be taxed by UK tax authorities and on what basis would they calculate bearing in mind fluctuating exchange rates?

I am in a similar position. The Double Taxation Agreement between the UK and Germany awards taxing rights over state pensions (social security pensions) to the paying country, i.e. Germany in this case. Your tax office in Germany is Finanzamt Neubrandenburg Rente im Ausland (RiA) [link removed by admin] (if HMRC will allow the link, or at least leave the basics of the web address) and you should contact them to inform them of your chargeability. You will need to correspond with RiA in German, even though some of their website and forms are in English as well as German! The Deutsche Rentenversicherung (DRV) will inform RiA each year of the amount of your pension and it is taxable in its entirety because, as aresident you are not entitled to the German personal allowance, unless at least 90% of your income is taxable in Germany (unlikely), or your income that is not taxable in Germany is less than the German personal allowance (currently about 10,000€). In such cases you can elect to be treated as if you were resident for the purposes "only" of taxing your German pension (a tax fiction for want of a better phrase). This would result in no tax being payable on your small pension if you can make that election. The tax system in Germany is different to that in the UK. A major difference is that it is not a self assessment regime and you are required to file a tax return each year without being prompted. However, for RiA cases you can elect for the tax office to assess your tax liability in the absence of a tax return (they get all they need from the DRV). You can also set-up a direct debit for paying that tax to make sure you do not miss the payment deadline and get penalised as a result. In the UK you are not required to include the German pension on your UK tax return (if you submit one) but are requested in foreign note FN8 to put some text in the information box on your return, along the lines of: "I receive a German state social security pension from Deutsche Rentenversicherung Bund, paid via the German Post's Renten Service, which shall be taxable only in Germany under Article 17(2) of the UK/Germany Double Taxation Agreement. The pension has been in payment since XX 20XX. This statement is made in accordance with SA106 foreign notes, which explain on page FN8 that if you have a pension that is not taxable in the UK because of a DTA, give full details of the pension's payer, pension and relevant DTA in the Any other information box on your tax return." I assume HMRC may need to you make a statement of this nature once if you do not have to self assess, just so that your record has been noted but as I submit a return I am not sure about that. Hope this helps

Thank you very much Gary

Hi,

If this is a German state pension, it is only liable in Germany and doesnt need to be declared in the UK. If a private pension, you need to declare the amount in sterling and it will be taxed at the highest rate of tax you are liable to.

Thank you.

i receive a German state pension and an English one. I reside in the UK. The German Finanzamt (RiA) send me a letter that they want to calculate my tax . I need for tis reason a EU/EEA certificate which needs to be confirmed by HMRC. How do I do this? Thanks

Hi,
This form should have been given to you by the German authorities.
You then fill in details of the income in UK and send it to HMRC to agree the figures and stamp it and return to you.
You should send the form to HMRC PAYE& Self Assessment BX9 1AS.
Thank you.

I started to receive a very small German pension in 2022. I know that the DRV inform the RiA of the amount paid for the year. Do the RiA automatically send you a bill for any tax due and if so, when are tax demands sent out? If not, will they wait for you to send in the limited tax liability form first before contacting you? I emailed the RiA with this query in March 2023 but have not received a reply and am confused as to what action to take. Any advice would be appreciated. Thanks.

Not something HMRC can comment on. Germany does not operate a self-assessment regime and do not issue a notice to file a ruturn - you are simply under a legal obligation to submit a return by 31 May (I think), unless you ask RiA to undertake an Amtsveranlagung (assessment by RiA without a tax return). I would strongly recommend asking RiA to assess you, After they receive your return or undertake the Amtsveranlagung, they will send you a Steuerbescheid (tax assessment), against which you can appeal if you choose. That will set out your income, tax-free pension element, the tax due and the payment date. It makes clear that the exchange rate risk is yours and that is payment is not received by the due date, then interest will be payable. I started to receive my pension in 2022 and have opted for Amtsveranlagung. My payment date was 19 July. I have opted to pay by direct debit as this means you cannot miss the payment date (which I think is a given period after the assessment is issued, unlike the UK with fixed dates for everyone!). All of the forms you need are on the RiA website.

Kalim, I have just noticed your post. I am not sure why RiA is after a form UNLESS you are electing for the tax fiction of being treated as tax resident in Germany (unbeschraengt steuerpflichtig) to give access to the German personal allowance (Grundfreibetrag) and other German allowances. This is only available for people if, either 90% of their worldwide income is from German sources, or the amount of worldwide income that is not taxable in Germany (because of the tax treaty) is LESS than the German personal allowance - that non-German income would then feed into the rate at which you pay tax in Germany. Otherwise you are beschraengt steuerpflichtig (limited liability), and are simply taxed on your entire pension, other than the tax free element and an general allowance worth 102€. If you opt for Amtsveranlagung, then RiA wimply deals with all this but you do need to send them the relevant forms - none of which need to be signed/stamped by HMRC.

Thanks for your advice, Do you have to send the Amtsveranlagung form in the post to RiA or can it be sent electronically? Many thanks.

Gary, the Amtsveranlagung form asks for a tax no which I don't have. Do you know if it's ok to leave this blank if the rest of the form is completed? Thanks again.

Jea7, I communicate via e-mail but you need attachments to be in PDF and a few other limited formats - it will complain if you get it wrong. You will get 2 tax ID numbers. One is issued by RiA when they know you exist, so sending the form, absent a number, with a covering email should cover both bases. The other number is the newer Tax ID number that is intended to stay with you when you change tax offices (akin to our tax numbers) and will be issued in due course by the central tax office - you should not need to do anything to get this but it can take months - many months. But once you are in contact with RiA, you'll probably get an allocated caseworker and also be asked to complete an email authority form.

Hi Jea7,
If the pension is a German State Pension, then it is not taxable in the UK.  
You will pay tax on it in Germany.
If the pension is a private pension, it is taxable in the UK.  
You would need to declare the pension on a Self Assessment Tax return.
Thank you. 

 

Gary, Do you have to submit the Amtsveranlagung every tax year or does it continue when you have submitted it the first year? Thanks.

HMRC Admin 25. If you're paying tax to Germany on a German State Pension, do you have to inform HMRC of this in writing? I was advised previously by HMRC in a phone call that they don't need to be told anything about it. I wanted to clarify whether a note needs to be made on your HMRC file to this effect? Thanks.

 You make the election by reference to a particular tax year and it remains effective until you rescind it. Have a look at the "forms" tab on the RIA website (I cannot post links), either in English or German, and submit a "Antwortformular englisch - Reply slip" form. Re your question to HMRC about the informing them of the pension, if you submit a UK tax return, Page FN8 of the Foreign Notes to SA106 say "If you have a pension that’s not taxable in the UK because of a DTA, give full details of the pension’s payer, pension and relevant DTA in the ‘Any other information’ box on your tax return. " I take that to mean that one should put the same text in the "any other info box" every time one submits a return. It will be interesting to learn from HMRC what the process is if you are not in SA and/or if, having been in SA, HMRC agree that tax returns are no longer necessary.

Hi Jea7
As the German state pension is only taxable in Germany, you do not need to declare it in the UK

Hi Gary Coombs
The guidance on the SA106 notes advise "If you have a pension that’s not taxable in the UK because of a DTA, give full details of the pension’s payer, pension and relevant DTA in the ‘Any other information’ box on your tax return".  
The any other information is box 19, which can be found on page TR7 of SA100.  
As you are in receipt of a foreign pension, you will always meet the critieria for completing a self assessment tax return, so this pension will need to be declared in box 19 every year.

Thanks. I am comfortable with the SA106 position, as we have been doing it for several years now, but was hoping that my wife and I could come off SA now that we no longer have UK property rental income. Oh well, at least I know well in advance that we will continue to have the joy of each of us completing a return each year. Also tell Jea7 that they too can look forward to a SA return each year...

1) If you want to pay your German tax bill by direct debit, do you initiate it at your bank using Iban and bic numbers or must you complete a direct debit form from the German tax office? The only form I can find on the German Tax Dept website appears to be for online payment by credit card? 2) If you set up a direct debit for payment of tax due to the German Tax Dept, will tax then be automatically taken each year, without you having to contact them? Thanks for your assistance.