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Posted Tue, 16 Mar 2021 16:35:23 GMT by HiFi
So… to sum up: - The Belgian authorities now require non-residents in receipt of a Belgian-source income to complete a Non-Resident’s Income Tax Return every year. Apparently this applies from 2019 onwards, which explains why many people, including my mother, have been sent a Belgian Tax Return for 2019. - The Belgian Authorities have ‘reinterpreted’ the wording of Article 18 of the UK/Belgium Double Taxation Agreement to insist that Belgian State Pensions (Pillar 1) are not covered by the first Protocol (2009) which they say only applies to Pension SCHEMES (Pillar 2). Their letter to Birch states that there has been an exchange about this subject with the UK Tax Authorities, but their position does not seem to have been adopted by HMRC. The HMRC guidance remains that Belgian state pensions first paid before 1 Jan 2013 are taxable only in the UK. - Birch and Oldie have been notified that their pension will be subject to Belgian tax from 1 Jan 2021, when seemingly they should be exempt from Belgian tax under 18b of the DTA. Tax has already been deducted from Birch’s pension. Horrifyingly, there is also an implication that the Belgian authorities may seek to tax all pensions since 2013 (Roy Davis) with a refund for any UK tax paid to be claimed from HMRC. HMRC - I understand that individual circumstances vary and the paperwork / correspondence needs to be reviewed before individual responses can be given. However, there will be many UK taxpayers affected by this issue and we all do need clarification on Belgium’s reinterpretation of the Double Taxation Agreement. The 5th April will soon be with us and, obviously, the correct information and guidance is necessary in order that UK Tax returns can be completed accurately.
Posted Thu, 18 Mar 2021 11:05:33 GMT by HMRC Admin 17

Hi, 
 
Guidance has been given as per UK agreement in terms of taxation for UK residents with a Belgium source.

Any disagreement with this by Belgium authorities would need to be put in writing so that HMRC can then take this further with them if necessary. 


Thank you.
Posted Thu, 18 Mar 2021 14:02:19 GMT by Birch
The current situation is far from satisfactory for those of us caught in the middle. The decision regarding which country taxes us, is obviously not ours to take. Meanwhile the Belgian Tax authorities are already deducting tax from 01.01.2021, which may or may not be sufficient when it comes to the reckoning submission at the end of their tax year. Letters from both the Belgian tax and Belgian pension authorities have been forwarded, as requested, to HMRC at the given address. How long does it take to have a response? It would be reassuring to have at least an acknowledgement, with ideally an indication of whether the UK tax position as stated above still holds. If it does, and given that HMRC already have the necessary correspondence, I trust that they will contact the Belgians and as stated above "take this further with them if necessary". Otherwise for a good many of us, the prospect of being taxed twice looms ahead as both tax authorities appear to think they have the right to do so. My letter from the Belgian Tax indicates that, "However, after a recent exchange on this subject with the British Tax authorities, the Belgian Tax authorities had to review their position." They then go on to explain the different treatment of state pensions and those under a pension scheme. It is all most unsettling.
Posted Fri, 19 Mar 2021 10:48:47 GMT by Roy Davis
Further to my post of 8 days ago, and HMRC Admin 5 reply to me of 5 days ago, my situation has now developed to that of Birch (post 21 hours ago). The Belgian Fiscal Inspector in his latest email states HMRC is wrong, and keeps referring to Article 18 of the 1987 Agreement, despite my copying him with the text of Article XI of the 2009 Protocol (applicable since 1/1/2013) which says Article 18 is deleted, and which introduces the 'pre 2013 Receipt of Pension consideration '. This Inspector similarily draws a distinction between a Belgian State Pension and a 'Pension Scheme', and is initiating a deduction at source by the Belgian Pension Service from 1/1/21. He says that will be at a provisional Tax Percentage pending receipt of a Tax Return at the end of the year. He says that if this means a double taxation situation, then HMRC are obliged to make refunds under Article 23 of the 1987 Agreement. He finishes by saying if I still have questions about the Double Taxation Agreement I should refer them to their experts on International Law - belintax@minfin.Fed.be. We urgently require a UK position on all of this and advice.
Posted Tue, 23 Mar 2021 09:09:03 GMT by HMRC Admin 17


Hi, 
 
All Belgian sourced pensions (including Belgian State Pensions) are taxable under Article 18 (a) or (b) which, when read from the perspective of a UK resident, states:

(a) Pensions and other similar remuneration arising in a Contracting State [Belgium] and paid to a resident of the other Contracting State [UK] shall be taxable only in the first-mentioned State [Belgium]

(b) However, where pensions and other similar remuneration under a pension scheme were first credited or paid before 1 January in the calendar year next following that in which the first Protocol to this Convention entered into force (1 January 2013), all payments under that scheme shall be taxable only in the other State [UK].

Paragraph (a) above confirms that a Belgian sourced pension will be taxable only in Belgium and will therefore be exempt from UK tax. However, Paragraph (b) goes onto state that, if the pension in question started prior to 1 January 2013, then that pension will be taxable in the country of residence (the UK) and will be exempt from tax in the source state (Belgium). Furthermore, HMRC guidance at DT3406 confirms that customers can’t elect which country their pension is taxed in, and this can only be determined upon the date in which that pension started.  So, to summarise:

• Belgian Pension started (or was paid) BEFORE 1 January 2013 = Taxable only in the UK and exempt from Belgian tax

• Belgian Pension started (or was paid) ON OR AFTER 1 January 2013 = Exempt from UK tax and taxable only in Belgium

If you believe your Belgian pension has been taxed in the UK incorrectly and that it should be taxed only in Belgium, you should write to HMRC to make a formal repayment claim via our usual Overpayment Relief Provision at Schedule 1AB TMA 1970.

Thank you.
Posted Tue, 23 Mar 2021 12:16:47 GMT by HMRC Admin 19
Hi Brch,

HRMC will take this further if there is a discrepancy with the two countries interpretation of the treaty.

You have done the right thing to write to us and this will be dealt with as soon as possilble. At the moment it is taking up to 8 weeks to process post. 

Thank you.
Posted Tue, 23 Mar 2021 16:56:55 GMT by Roy Davis
Thank you HMRC Admin 17 and 19 for the above. I am convinced that the discrepancy in interpretation is because the English language version of Article 18 (b) is AMBIGUOUS - we are reading it one way, and the Belgians ( who I found were insistent on THEIR rigid grammatical views when I worked in Belgium) are reading the other meaning. I am very surprised that an understanding of the actual meaning seems never to have been reached seeing as the text of the updated 18(b) was defined in the 2009 Protocol. The ambiguity is as follows- my insertion of brackets is for highlighting - We are reading 18 (b) as ' where (pensions) and (other remuneration under a pension scheme) '. That is, we see the bracketed items as separate. - I believe the Belgian Fiscal Authorities are reading 18 (b) as ' where ( pensions and other remuneration under a pension scheme) '. That is, they are making the pensions part of the pension scheme, and as they claim the Belgian State Pension is NOT a pension scheme, then tax on a Belgian State Pension is payable in Belgium. If I follow the interpretation given byHMRC Admin 17 above, then I must tell the Belgian Fiscal Authorities I am NOT paying tax in Belgium, and I am CONCERNED ABOUT THE REPERCUSSIONS I MAY BE FACING.
Posted Wed, 24 Mar 2021 11:25:03 GMT by Birch
I agree about the ambiguity problem. In my post of 13 days ago, I tried to point this out using the letter I had received from Belgium. French, being more precise, used to be the diplomatic language. I also suspect that the interpretation unintentionally slipped through the net until Brexit which necessitated a review of all documentation. Taking 18a) and 18b) together, the intention of the wording becomes clearer. We are looking at section 18 simply from our view point. The reply from HMRC Admin 19 was most welcome. I hope the situation will be clarified for all of us with Belgian State pensions predating 2013. The decision needs to be before we submit our 2020-2021 tax return.
Posted Wed, 24 Mar 2021 12:45:09 GMT by Sally Rogers
I have been following the conversation above as I am dealing with the same situation with my father's Belgian state pension which has been in payment for over 25 years and declared and taxed in the UK since it started. In January he suddenly received a tax return form from Belgium for the tax year 2019 (in Flemish). They also started charging him the Cotisation de Solidarite from January and I have been going through the same hoops. The Belgian tax authorities are saying that the Belgian state pension should have been taxable in Belgium since 2013 based on Article 18 of the Double Taxation Agreement following the 2009 protocol changes although they are only going back to 2019. They state that it is not covered by 18b as the definition of "pension scheme" in Article 3 clause 1 (l) does not include the Belgian state pension. I have emailed them asking for them to put their explanation in writing but not heard back yet. We have also written to HMRC explaining the situation but not heard back yet. This is a very distressing position for an elderly person to be in - should we complete and return the Belgian tax return? What do we do about the UK tax return for 2020-21 coming due soon?
Posted Thu, 25 Mar 2021 10:20:23 GMT by HMRC Admin 17


Hi
 

Roy Davis,
 
If you believe the Belgian authorities are taxing this incorrectly, then as advised, please write to us so they we can look into this further.

If your pension started before 2013 then it will be liable for tax in the UK only.

If it started after 2013, then it will be liable in Belgium only. 

Thank you.

 
Posted Thu, 25 Mar 2021 14:15:50 GMT by HMRC Admin 17

Hi

Sally R,
 
If the pension started before 2013 then it will be taxable in the UK. If it started after 2013 the it will be taxable in Belgian.

As you fathers started prior to 2013 then this should be taxable only in the UK.

If you have already written to us with the details then we will look into this for you.

You have done the right thing.

You should continue to report the income to the UK as normal. 

Thank yoy.
Posted Fri, 26 Mar 2021 17:11:55 GMT by Roy Davis
From Roy Davis for HMRC Admin 17 Further to your post for me one day ago (it would be particularly helpful if posts were dated ), the Belgian Fiscal Authorities acknowledge that I have received a Belgian State Pension since before 1 Jan 2013, but have bluntly said to me in an email that HMRC are WRONG in telling me that I have to pay tax in the UK on a Belgian State Pension, as it is clear (to them) that the 2009 updated Article 18 paragraph b) of the Double Taxation Agreement definitely does NOT apply to the Belgian State Pension, and I MUST pay back Tax to them from 2019 (and possibly before) as well as them now applying 2021 tax at source to ongoing pension payments. THIS IS THE SAME Article 18 b), word for word, which YOU, HMRC Admin 17, quoted to me as the reasoning why I must pay tax in the UK (as I have been doing since first receiving the pension) in a post on this forum several days ago. There is a COMPLETE IMPASSE and it must be resolved URGENTLY - the Belgian Authorities are demanding a full Tax Return showing TOTAL worldwide earnings for their Tax Year (Jan 1 to Dec 31) 2019 which should have been submitted before the end of January 2021, but on which they are giving some leeway because of COVID. If you give me an email address, I can forward the email from Belgium. If I print it out and post it ( I would need an address) I'm worried about postal delays due to COVID. Alternatively I am prepared to discuss it by telephone if you provide a number.
Posted Fri, 23 Apr 2021 16:29:30 GMT by M.Quaghebeur
Dear Sir, Dear Madam, The Belgian tax authorities are sending tax notifications to UK residents who receive a Belgian state pension. Until now, they took the position that British retirees who had received their Belgian state pension for the first time before 2013 continued to be liable to tax in the UK and that no Belgian tax was due. They say they have read article 18 of the double tax treaty between Belgium and the UK which says : Subject to the provisions of Article 19, (a) pensions and other similar remuneration arising in a Contracting State and paid to a resident of the other Contracting State shall be taxable only in the first-mentioned State; (b) however, where pensions and other similar remuneration under a pension scheme were first credited or paid before 1 January in the calendar year next following that in which the first Protocol to this Convention entered into force, all payments under that scheme shall be taxable only in the other State. Moreover, article 3, defines the term "pension scheme” for Belgium as follows: (l) any plan, scheme, fund, trust or other arrangement established in Belgium : (i) to the extent that it is operated to administer or provide pension or retirement benefits or to earn income for the benefit of one or more such arrangements, and (ii) provided that it is an entity, including pension funds, or a pension scheme arranged through an insurance company, that is organised under Belgian law and is regulated by the Banking, Finance and Insurance Commission or registered with the Belgian tax administration. The competent authorities may agree to include in the above, pension schemes of identical or substantially similar economic or legal nature The Belgian tax authorities (i.e. the department dealing with international taxation) has recently explained they have misread the treaty and assumed that the 2013 rule also applied to Belgian state pensions. They state that they have now understood that article 18 (b) does not apply to state pensions but only to pensions under a pension scheme. This new reading was passed on to the tax agents dealing with the income tax returns of non-residents, who are now sending letters to all UK residents who receive a Belgian private pension. The tax authorities can go back three years in Belgium. This means that they can tax Belgian state pensions received in 2018, 2019 and 2020. What is the position of HMRC? Has there been a negotiation with the Belgian Tax Authorities. Best regards
Posted Mon, 26 Apr 2021 14:06:13 GMT by HMRC Admin 17

Hi,

 
All Belgian sourced pensions (including Belgian State Pensions) are taxable under Article 18 (a) or (b) which, when read from the perspective of a UK resident.

Paragraph (a) confirms that a Belgian sourced pension will be taxable only in Belgium and will therefore be exempt from UK tax.

However, Paragraph (b) goes onto state that, if the pension in question started prior to 1 January 2013, then that pension will be taxable in the country of residence (the UK) and will be exempt from tax in the source state (Belgium). Furthermore, HMRC guidance at DT3406 confirms that customers can’t elect which country their pension is taxed in, and this can only be determined upon the date in which that pension started.

So if the Belgian Pension started (or was paid) BEFORE 1 January 2013 = Taxable only in the UK and exempt from Belgian tax. If the Belgian Pension started (or was paid) ON OR AFTER 1 January 2013 = Exempt from UK tax and taxable only in Belgium.

If the Belgium tax authorities are stating different to this can you please send evidence in writing to us so that our specialist team can take this further and see:


Double Taxation Relief Manual .

Thank you.
Posted Tue, 27 Apr 2021 13:42:11 GMT by Birch
27 04 2021 Whilst customers can’t elect in which country their pension is taxed, I don’t think the intention of the Tax Treaty was that it would be interpreted in different ways with the result that customers would be taxed in two countries on the same social security pension income. Currently Belgium has the upper hand in that they pay the pension earned through employment in their country and as from January 2021 they have deducted some tax on those pensions which predate 2013. So, despite the opinion of HMRC, some of us, rightly or wrongly, are already paying tax to Belgium. Those deductions at source during 2021 might not be sufficient to pay the amount of tax required for the Belgian fiscal year 2021 once the Belgian tax form has been correctly completed towards the end of 2022 with a reckoning sometime in 2023. Any tax due remaining unpaid could no doubt be withheld from future pension payments. As previously, the Belgian pension for 2020-2021 should be declared to HMRC. However, the first 3 months of this year pose a problem. HMRC say we should report the gross amount as before. It is clear there is still no question in their minds as to where pre 2013 pensions should be taxed. We shall therefore pay tax again on the same amount (January to March) at the latest by the end of January 2022, long before we shall know precisely what our final tax bill will be to Belgium. The result of both tax authorities believing that they are in the right is that we are in the position of paying tax twice, despite the aim of the Treaty being to avoid this. I expect that both sides are familiar with Article 26: Exchange of information. I would hope that they will also use Article 25: Mutual agreement procedure, particularly with the amount of evidence sent to HMRC, “the competent authority of the Contracting State” of which the concerned contributors to this forum are residents. What more must we do to further this procedure? One major issue is that those receiving a pension pre 2013 are of a certain age and more; some are no doubt quite ill and unable to cope. The contributors on this forum are the able ones or able family members. Spare a thought for the others. I look forward to having a response from HMRC, the 8 weeks wait for a response, as indicated on this forum, is almost at an end.
Posted Wed, 28 Apr 2021 13:28:21 GMT by HMRC Admin 17

Hi,
 
If you are still having trouble with the Belgian tax authorities with their interpretation being different to HMRC

then can you please send all the relevant evidence to us so our specialist tax treaty team can take this up on your behalf. 

Thank you.
Posted Thu, 29 Apr 2021 11:33:15 GMT by John Miller
I have received a Belgian state pension since late 2015. At the time I was living in Switzerland and it was taxed there under the Belgian-Swiss agreement. I returned to the UK in May 2019, but only discovered in January 2021, when finalising my UK self assessment for 2019-20, that Belgium taxes their state pension at source for pensioners living in the UK. So I immediately revised and re-submitted part of my 2019-20 UK tax declaration to claim Foreign Tax Relief for the Belgian tax paid in Belgium. Four months ago, HMRC Admin 5 replied to jonathondean on the subject of Belgian-taxed pensions: "Hello jonathandean. That is correct, if Belgium are taxing your Belgium state pension you will no longer report it on your Self Assessment " But is what HMRC5 is saying here, in fact, correct? I claimed Foreign Tax Relief on my revised HMRC Form SA 106 for the Belgian tax on my Belgian pension in 2019-20. However, HMRC 5 is suggesting in the reply to jonathandean that I should have left mention of my Belgian state pension income out of my Tax Declaration. What, in fact, should I do in terms of declaring to HMRC a Belgian state pension which is taxed in Belgium?
Posted Fri, 30 Apr 2021 15:36:41 GMT by HMRC Admin 2
Hi,

As your Belgium pension started after 01/01/2013 the new treaty as amended by the 2012 protocol will apply.

Under Article 18 a) pensions and other similar remuneration arising in a Contracting State and paid to a resident of the other Contracting State shall be taxable only in the first-mentioned State.

Belgium: tax treaties

Thank you.
Posted Sat, 01 May 2021 10:04:30 GMT by John Miller
Thanks, HMRC Admin 2. I realised after sending it in that my question almost answered itself - I should have looked more closely at the Guidance Notes (and have tried to find this very interesting forum sooner!!). What I should have done when completing my 2019-20 tax return, on learning in January of the Belgian change of view, was not claim FTCR at all but instead make clear in the 'Any other information' box on the SA 100 form that the Belgian State Pension income that I had indicated was completely exempt from UK tax. I will now send a corrected tax return to HMRC.
Posted Mon, 10 May 2021 09:53:38 GMT by Suquie Hart
I am in a similar situation. I worked in Belgium for about 13 years and so receive a Belgian government pension. I received a tax return non resident in December 2020. Following that I spoke to an expert at HM Tax who said that if I got the pension before the convention changed on 1 January 2013 then I should continue to do as I have always done and that is declare the amount on my UK tax declaration. So I wrote a letter on 9th January 2021 to the tax people in Belgium stating this and sending a copy of the Double Taxation Relief Manual where it clearly says on page 3 "where a UK resident was receiving a pension from Belgium before 1 January 2013 the pension will continue to be taxable solely in the UK. There is no option to be able for the pension to be taxed in Belgium." On 30th April 2021 I received a reply from them stating they do not agree with me but giving me the option to say I am not in agreement with what they say and why. I intend doing this but really I will be repeating in my letter what I wrote on 9th January. I really would like guidance on this. I am not feeling very positive. What do I do if they come back and say I have to declare this amount in Belgium? The tax form looks complicated to me. I would like some help in this matter. Could the tax authorities of the two countries get together?

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