Foreign Pensions - Double Tax Agreements

thankyou. But if a payment is a dta art. 17.2 lump sum then it is only taxable in UK, meaning exemption with progression would apply in austria, not credit method. However it seems that ´Lump sum´ (english) ´may´ be interpreted as different from ´einmalzahlung´ ( word used in the german text of the dta - literally ´one time payment´ ). This would make 17.2 from an austrian perspective only apply to an entire pension pot in one go. This suggests that dta art. 17.2 is not really reciprocal . Your comments ? thanks

Hi Jon Carter,
Under the terms mentioned, the pension is only liable in the UK.
As you are not a UK resident you would need to check with the Austrian tax authorites to ascertain if they still wish the income to be referred to when you submit a tax return.
Had the situation been the reverse, under UK details, you would not declare the income but make reference to receiving it and that it is tax free and refer to the particualr article of the dta.
Thank you. 
 

Hi I have a private pension in the UK that I can withdraw as a lump sum when I reach 55. I have lived in Australia for 18 years and so am a non resident of the UK. Will I pay tax on the lump sum in the UK when the money is paid out? I had planned to leave the money in a UK bank account and not transfer to Australia.

Hi,

Yes, tax will be automatically deducted on the pension. You can see guidance here:

Tax on your UK income if you live abroad

Thank you.

Thank-you very much for your reply to my previous question. I find that I need your help on a further point: Art 17 deals with Pensions. Art 17.5 and Art 17.3 seem between them to define what a ´pension´ / ´pension scheme´ is, for tax purposes in the host state. Am I correct in assuming this definition sits outside the fact that the uk is no longer a member of the eu/eea ? If not, and a uk private pension is therefore not recognised as art 17 Pension in the host state , then ``other income`` would seem to apply , with the host state having sole taxation rights. Thank-you.

Hi Jon Carter,
The DTA came into force in 2018 which is prior to the date UK left the EU/EEA and as such has no bearing on the comment and the previous reply stands.
Thank you. 
 

Thankyou for your reply . Just to be clear , as I interrpet your answer to my question, If the host state (eg. austria in eu) in 2024 no longer gives tax relief on personal contributions, from a resident there, to a uk private pension, the pension nevertheless remains a ´pension scheme´ as defined in article 17.5 . This is because the article effectively preserves the status of the uk private pension as an art. 17.5 ´pension scheme´ because the pension met the art.17.5 definition at the time the double taxation treaty was put in force in 2019. Am I correct ? Very many thanks

Hi Jon Carter

Yes that is correct.

Thanks

I have lived in Canada since 2009. I had 2 small private pensions in the UK. In 2021 I released the funds as 2 lump sums and brought them to Canada. That was the whole amount, the pensions have been closed in the UK. They were taxed by HMRC, they have also been taxed by CRA. HMRC and CRA are both insisting it is taxed by them.. I am still trying to sort this out nearly 3 years later, and have still paid tax on this money twice. After much back and forth CRA has told us it is taxed at 10% in the UK according to Article 17 sectn 2. We applied to HMRC for a refund quoting Article 17 section 2 - it does mention "Annuity" not pension being taxed at 10%, and seems to indicate in Section 1 that a "pension" should be taxed in the UK..? We just received a letter from HMRC stating that pension lump sums are NOT covered by the double taxation treaty. I thought ALL income is covered one way or another? This lump sum must be covered somewhere. Can you please tell me definitively whether this whould be taxed in the UK or Canada, and the Aricle / section that applies. I would like to get the double tax returned.

Hi,

You can see guidance here:

DT4605 - Double Taxation Relief Manual: Guidance by country: Canada: Notes

Thank you.

Thank you HMRC Admin19. Looking at that link the guidance seems to say the Pension lump sum should be taxed at 10% in the UK? But when I read the treaty Section 17 says under Section 3 and 4, both Annuity and Pension "... does not include any payment under a superannuation, pension or retirement plan in settlement of all future entitlements under such a plan ..." The pension money I collected was the whole amount, so full setttlement, no more entitlement under that plan. This would suggest that the pension lump sums I took should be taxed as regular income in the UK?? The letter I just recieved from you says that the lump sum payments I received are NOT covered by the treaty. So which is the correct interptretation please?

Hi,

Article 17 of the UK / Canada tax treaty, coveres pensions and annuities. As the article does not mention pension lump sums in any way, this means that lump sums are not covered by the tax treaty and as they are not covered by article 20A 'other income' either, there is no tax relief available. For this reason, the lump sum is taxable in the UK, as well as in Canada.

Please have a look at article 21(1)c, the elimination of double taxation. This suggests that to prevent double taxation arising, you should claim a tax credit in Canada for the tax paid in the UK. 

1978 Canada/UK Double Taxation Convention

Annuities, not purchased as part of a pension plan, are taxed at 10% in the UK under the DTA.

Thank you.

I am tax resident in Austria. Could you confirm which article(s) in the current austria / uk double taxation treaty relate to income from the following uk sources: 1. The uk state pension 2. An lifetime pension annuity purchased in the uk many thanks

Hi,
The UK / Austria tax treaty can be found at UK/Austria Double Taxation Agreement.  Article 17 covers private pensions.  
State pensions are covered under article 20 - other income.  All article are reciprocal, meaning they apply equally in both directions.
Thank you.