Tax on German pension

I am a little confused. The posts seem to imply that if the pension is from the German state, then tax is paid only in Germany. However, if I am reading it correctly, if you are UK resident and a UK national, Article 18 of UK/ GERMANY DOUBLE TAXATION CONVENTION states “ 2 b) However, such pensions and other similar remuneration shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.” Can you please clarify? (I assume resident in UK, but having dual German / UK nationality makes no difference.)

Hi,

German state pension is only taxable in Germany. If you have any other German pension then this could be taxed In both countries and you would then claim relief for the foreign tax paid.

Thank you.

Can I ask under what circumstances a pension can be taxed in both the UK and Germany? Article 17(1), (2), (3) and (4) all refer to pensions being taxed only in one country or the other, as does Article 18(2). Is there soe other provision that could lead to them being taxed in both countries?

Hi Gary C,
It depends on the terms of the double taxation treaty as to whether income can be taxed in both countries.
If so, then Foreign Tax Credit Relief would be applied on one of the countries to reduce the liability in the other.
So whilst declared as income in both, it is really only taxed in one.
Thank you. 

Thanks but that doesn't really answer my question. We are talking here about the UK/German treaty and pensions, not some random form of income. HMRC Admin 19 said "If you have any other German pension then this could be taxed In both countries and you would then claim relief for the foreign tax paid." So, under what circumstances could a pension falling within the UK/Germany treaty fall to be taxed in both countries given the wording of Articles 17 and 18?

Hi Gary C,
Your country of tax residence has the right to tax you on your worldwide income and the country that pays the income also hasthe right to tax income paid by them.
It is therefore up to you to notify the relavant tax authority if exemption applies under the terms of the double taxation treaty.
Until then, the income could be reasonably taxed in each country.
Thank you. 

Thank you. So the message is for people just to make sure they notify HMRC or the Finanzamt accordingly but the treaty itself does not foresee both countries taxing pensions.

I retired as of last Friday and have applied for my German Pension (I lived there for about 8 years 1980 - 1989) via the HMRC. Does anyone know a) do I lodge the information with the RiA in advance or in retrospect? b) how long it takes to receive the pension from Germany. I know the earliest date is 1st April but understand that the wheels of bureaucracy sometimes turn very slowly It seems quite complicated (it's been a long time since I dealt with German 'officialese' but was going to take the forms to Germany in April for my nephew to have a look at and help me with.

I assume DWP has sent you form CFN901 to complete to tell them about your non-UK pensions, so they can set the ball in motion. In theory it shouldn't take too long as they exchange all information electronically but DWP will need something like 6 to 8 weeks to get the process going and Germany may take about 3 or 4 months to their normal timetable. I applied for mine about 5 months before the start date, so it could be paid on time at the end of the first month (which is the first full month following your birthday as they do no apportion month 1). DRV will inform RiA and you will get a Tax Identification Number at some point from a central office but RiA will also give you a Steuernummer. I informed RiA as soon as I knew I would be getting the German pension, even though there isn't much to do until the end of the tax year in December. There isn't really any reason to delay and you can all of the forms about communicating by email, paying by direct debit and asking RiA to assess you absent tax returns all set-up before the end of the year. The RiA website has a lot of info and forms in English and that side of things ran quite smoothly. The DRV process shouldn't be too bad either, except they may well ask you for your post-17/pre-work education/training history to update that on your German records before doing the EU calculations to work out how much you will get.

Gary The only form I have filled in detailing my Non-UK Pensions is the form BR1 where I detailed when I had worked in Germany along with my Steuernummer. I checked the CFN901 form you mention. What came up on a search was a form for payment of the UK State Pension into an account if you live abroad: 'International Pensions Direct Payment is the Department for Work and Pensions’ way of paying your pension or benefit direct to an account of your choice outside the United Kingdom'. I may as well start the process now, the DRV sent me a letter saying I was entitled to a pension dated 24th February (delay due to postal system) by which time I had already completed the BR1 (4th February). The Non-EU/EEA certificate needs to be certified by the DWP if I understand correctly, so am assuming that would need to be sent to them by post for completion. I might give them a call later. Thanks for all the information you have posted on this, it has been a massive help.

Hi JanetTootill,
You would need to take this up the the German authorities.
Thank you. 

JanetTootill, I am a little confused. I searched BR1 and that relates to the old state pension for those reaching pension age before 6 April 2016. When I claimed my German pension a couple of years ago, DWP sent me (and others I know who have recently claimed their foreign pensions as UK residents) form CFN901 and routed that information to Germany (or whichever other EU country is relevant). You cannot download the CFN901. I think a call to DWP may be helpful to clarify the position for you. They will either say the BR1 can be used, or will pop a CFN901 in the post to you. It is not long - only about 8 pages of personal info and info about where you have worked and which bank account the pension should be paid into... I am not sure why you mention the non-EU/EEA form as you won't need that unless you are electing to be treated as if you were resident in Germany (a tax fiction) to give access to their personal allowance. You can only make that election if at least 90% of your income is taxable in Germany, or your income that is not taxable in Germany, i.e. everything other than your German pension, does not exceed the German personal allowance of 11,604€ for 2024. If you cannot make such election, you are taxed on every Cent under their limited liability rules. In the event you do need the certificate, you would send it to HMRC as it relates to your UK taxable income, not your pension as such. Hope this helps.

GaryC, this is discombobulating. I spoke to a lady today who is getting the CFN901 sent out to me. She was convinced that I would pay tax on the German pension in the UK, but I urged her to go back and check. She was very apologetic when she discovered it is indeed taxed in Germany (I referred back to the the posts in this thread). Will get the DD form filled out - am assuming it needs to be in PDF format? - and also the Reply slip - I'm assuming I tick the first box only. Been a while since I dealt with such formal German so glad I am retired, can take as long as I want. You are a godsend for anyone trying to navigate these confusing waters. Thank you again.

Just for information for anyone looking to apply for their German Pension, this is an indication of how long it might take. The CFN 901 took 2 weeks to reach me after I requested it. Once they receive the form, the DWP told me it takes them approximately 2 months to log, check and pass the form to the relevant German authority. How long it takes after that is down to the German Pension authority. So I'm not expecting to hear if I get any and how much until the autumn....

I am Spanish Resident and I am now thinking about "taking my private pension as a yearly income" (from GMPF) and would like to confirm if a) Income would initially be taxed at emergency rate b) Then I would have to claim the tax back c) System would then by updated Or are Goverment pensions exempt form "emergency tax" 

Name removed admin .

Hi Sharon2

Emergancy tax would be appled when you take the pension.  Government pensions normally remain liable to tax in the UK unless you are a national and a resident of Spain

Thank you

Background: My very elderly father worked his early years (5ys) in Germany before settling and retiring in the UK. He gets a UK state pension of around GBP1,000/m which is on the zero tax threshold. He has not filled in a UK tax return for decades. He has also been receiving a very small pension from the German State (Euro230/m). I have no idea if any tax has been paid to the German tax authority (there is a distict lack of paperwork) on this small pension but I sense no tax has been paid. As the German pension has been paid into a German bank account, I do not believe that HMRC has any idea that he has been receiving this pension. Questions: 1) Is there an onus for my father to advise HMRC of the German pension? 2) If this pension were to be taxed in the UK, will he be liable for past years tax and if so would penalties apply and over what period would they apply?

Hi,
When the UK/German tax convention was amended in 2010 it gave the German tax authorities the right to tax German social security payments, what is in effect state pensions in Germany.  For UK residents, whose German state pensions commenced after 25 december 2010, they are not taxable in the UK on this pension.
 If the pension commenced before that date, the pension remains taxable in the UK and should be reported on a self assessment tax return.  
A foreign tax credit of up to 100%of the foreign tax paid, can be claimed to avoid double taxation.
Thank you.

Hi, I am in receipt of a very small French pension. I was told last year that a tax return was not required if the total amount was under £300 and any tax due would be reclaimed through PAYE. When I called HMRC today, I was told the rules had changed and a tax return is now also required for foreign pensions of less than £300 a year. Can you please confirm if this is correct? Thanks.

My mum has been receiving a pension from Germany for 30+ years and has always led me to believe that it’s an occupational pension. She is German and lived and worked there until 1959. Due to a recent request by HMRC to start submitting tax returns again I’ve been looking into her very large file of German documents and am now convinced that it’s a state pension. When she first received it she was completing annual tax returns and it was shown as foreign income and tax was recovered for this income via a UK paid widow’s pension. About 20 years ago HMRC advised her that she no longer needed to file tax returns and they continued to collect the tax via her UK widows pension (they estimated the amount each year and amended her tax code). It started to be shown by HMRC in tax code notifications as Forces Pension (she says that she raised this with them at the time but they were unable or unwilling to change the narrative). Since 2011 they have been refunding the entirety of tax paid on this amount each year. My questions are: 1. Should she be paying tax on this pension in Germany? (I requested a German pension receipt notification for 2023 and it states “The ZfA will transmit the data to the responsible state tax authorities. Because the data has already been transmitted, it is not necessary for you to transfer the reported data to your income tax return “. I’m not clear which state tax authority this refers to…Germany or UK?) 2. Should she declare this as German state pension on her UK tax return? The Double Taxation Relief documents referenced in earlier posts here have just left me confused as they seem contradictory