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Posted Thu, 21 Oct 2021 13:59:19 GMT by RTDGM
I understand from a tax advisor that they have been advised by HMRC that the Belgian position on the double taxation agreement has now been accepted and that Belgian State pensions will be taxed in Belgium, not the UK, as of 2019. Why has HMRC "Admin 17" not communicated that outcome on this site?
Posted Thu, 21 Oct 2021 16:01:06 GMT by FrancisD
The Belgian tax people have said that I have to declare my very small Belgian State pension with them now. It is too small to be taxable in Belgium. HMRC have responded to this by saying that's as maybe. You will still have to declare it in the UK because, added to my UK pensions and earnings, it becomes taxable here.
Posted Mon, 01 Nov 2021 16:25:07 GMT by RTDGM
It's 11 days since I posted a question to HMRC as to why they had not communicated their acceptance of the Belgian position on the taxation of their state pensions. Since then, HMRC have given full refunds on UK tax paid on Belgian state pensions in 19/20 and 20/21 to the person whose tax advisor had talked to HMRC and been told of the decision. I am perplexed as to what is holding up a clear message that would allow others, like many of those people who have posted messages on this forum, to get their tax affairs sorted.
Posted Thu, 11 Nov 2021 09:45:37 GMT by HMRC Admin 2
Hi,

HMRC has now had further discussion with the Belgian tax authorities. This response will provide further details on the taxation of Belgian State pensions as well as the options available for those who are affected by the issue.

Treatment of pensions in UK/Belgium Double taxation agreement (DTA)

Under the pre-2013 DTA, all pensions (apart from Government-service pensions) were taxable only in the country in which the recipient was resident. This changed from 1 January 2013 so that all pensions (apart from Government-service pensions) became taxable only in the country in which the pension arises (that is, the country from which the pension is paid). 

Pensions that were already being paid prior to 1 January 2013 are dealt with by a “grandfathering clause” in the amended DTA (sub-paragraph (b) of Article 18).

You can find the full text of the UK/Belgium DTA here:

Belgium: tax treaties

The ”grandfathering clause” in sub-paragraph (b) of Article 18 applies to pensions and other similar remuneration “under a pension scheme”. This does not include State pensions.

The definition of a UK pension scheme explicitly excludes State pensions (or “social security pensions”). Although the corresponding Belgian definition is not as explicit, the Belgian tax authorities have confirmed that a Belgian State pension (which they refer to as a “first pillar” pension) does not meet the conditions and is therefore not considered to be a pension constituted under a pension scheme. 

While both governments had intended a different outcome from the 2013 protocol (as is clear from the explanatory notes of both governments), the unfortunate reality is that the intended outcome was not achieved by the legal drafting. This means that both the UK and Belgian tax authorities are legally obligated to apply the actual terms of the agreement.

Belgian taxation

The realisation of this error coincided with new rules in Belgium that require all non-residents to submit tax returns in Belgium if they have any Belgian-sourced income (that is, income that arises in Belgium). That has led to the Belgian tax authorities implementing this change for the Belgian tax year 1 January 2019 to 31 December 2019. It should be noted that under Belgium’s domestic law, they are able to assess earlier years if they make a specific intervention, though we have seen no reports of this having happened where the only Belgian-source income has been a State pension. 

For 2020, 2021 and future years, Belgium will be taxing all Belgian State pensions received by UK-residents regardless of when they were first paid. That income will not be taxable in the UK.

What you should do if you have been receiving a Belgian State pension

It is likely, at this stage, that you have only been taxed in Belgium on your Belgian State pension from the Belgian tax-year 1 January 2019 to 31 December 2019. However, we understand from the Belgium authorities that they can also assess the income for the tax-year 1 January 2018 to 31 December 2018.

You do not need to wait for a further assessment from Belgium to reclaim the UK tax paid on your Belgian State pension for the past 4 years. You should therefore make a claim for repayment of UK tax for the following years:
  • 6 April 2017 to 5 April 2018 
  • 6 April 2018 to 5 April 2019 
  • 6 April 2019 to 5 April 2020 
  •  6 April 2020 to 5 April 2021 
You can claim a refund up to 4 years after the end of the tax year to which it relates. You can find details of how to make a claim here:

Claim a tax refund

Thank you.

 
Posted Thu, 11 Nov 2021 17:02:05 GMT by Gary Coombs
As I said previously, I am following this discussion purely out of interest. It is encouraging to see that the position is finally becoming clearer, albeit with the outcome I feared in my post from 4 months ago. Despite that, I am sure those affected will welcome the certainty now being provided. The note above sets out the normal 4-year rule for making repayment claims but makes no mention of the possibility to make a Mutual Agreement Procedure (MAP) claim to obtain repayment of the 2 years preceding that, i.e. back to 2016/16. I don't know the extent to which anyone affected would need look back that far but it would be helpful if HMRC could set out the position regarding MAP claims in relation to this issue.
Posted Fri, 12 Nov 2021 18:06:58 GMT by HMRC Admin 10
Hi Gary Coombs

Guidance given shows that Beglium would not be going back further than the 4 years which is why the Mutual Agreement Procedure has not been mentioned. 

Thankyou.

Regards.
Posted Fri, 12 Nov 2021 18:51:07 GMT by Justme47
As a matter of interest, I have just been notified by HMRC that, irrelevant to dates, all UK residents in receipt of a Belgian pension, will be taxed on their Belgian pension by the Belgian tax office. I have another question. When completing the return to Belgium, I also included in my figures my English state pension PLUS a smal UK private pension. Does the Belgian tax office also tax you on your UK income?? (State and private UK pensions??) Equally, HMRC told me that, from jow on,I should not include my Belgian pension on the Self assessment which I complete every year. Is it therefore necessary to complete a Self assessment at all?? Thank you!!
Posted Fri, 12 Nov 2021 21:30:08 GMT by A Holden
"Justme47 said,,,,,,,I wanted to add that on the Belgian tax return, I have included both my UK and Belgian incomes. It seems unfair as I already complete a Self Assessment here in England, declaring all UK and foreign incomes. So I will be taxed twice, against the Double taxation taxation treaty." What I think happens here Justme47, is that they use ALL the income JUST (ONLY) to get the tax brackets to apply on the Belgian income. So they do not actually tax your UK source income. You enter that UK source income on the NON TAXABLE pension line in the other section so that it will not actually be taxed in Belgium. Here is a simplified example for you using dummy tax rates to give you the idea of how it works.... Belgian Pension say 2000 euros / UK Private pension say 20,000 euros / UK state pension say 8000 euros. The total pension income is 30,000 euros and they look at the TAX RATE PERCENTAGE that would apply on that level of income. Let us say that it is 25 per cent. Then I will be taxed in Belgium at 25 percent X the 2000 euros = 500 euros. (If they did not do it that way.....say the tax bracket in Belgium on just 2000 euros is only 5 percent tax rate at that low income level.... they would have only taxed me at 5 percent of 2000 = 100 euros.) So can you see that by considering all my UK pension income to get to the TAX RATE....... BUT NOT ACTUALLY TAXING my UK income.....they ARE actually pushing my Belgian state pension income up into a higher tax rate and they claim more Belgian tax from me on it! That makes them very happy. I hope that makes sense.
Posted Fri, 12 Nov 2021 22:01:05 GMT by A Holden
Justme47 I also did notice this... "federal standard personal allowances and federal tax credits, only applies for taxpayers that have at least 75% of their worldwide income taxable in Belgium..... and that is also applicable to non-residents," I have just started receiving the Belgian state pension. I shall not be doing my first Belgian tax return until next year, so I do not yet know for sure how they will tax me. Might this be another reason they could look at the level of all our pension income and be asking for it. Could it be that if we do not have 75% of all our pension income taxable in Belgium (paid from Belgium), then we do not get any allowance taken off??
Posted Fri, 12 Nov 2021 22:41:18 GMT by Seagull86
1. I recently registered for the Belgian e-ID which enables you to submit and view all tax information online. It required making an appointment via email and sending a copy of my passport and Belgian National number. I then had a video call and was helped to set it up. I can now log in with my user name and I receive an email one-time code. However, it’s only in French/German and Dutch. You can also see your pension information here so useful to see all tax and pension records in one place. Hope this is helpful. 2. When I recently sent back my tax return I was instructed by the Belgian tax accountant, who used to deal with all staff tax affairs when I worked there, only to put my (very small) Belgian State Pension (I worked there for 3 years). I did NOT include other income. The tax starts at €0 anyway. This is explained here: “ Residents of Belgium are taxable on their worldwide income, while non-residents are only taxable on Belgian-source income”. As I understand it, my tax could amount to 25% of my Belgian pension (€0-€13,540 tax bracket). There is no Personal Allowance in Belgium. The Belgian and U.K. tax years are different and it will require a bit of working out what to claim as a refund. I already have to use an accountant to help me with my self-assessment at substantial cost.

[External links removed - Admin]
Posted Mon, 15 Nov 2021 12:44:58 GMT by HMRC Admin 17

Hi
 
Justme47,

You would need to speak to the Belgian tax office to see what income they are expecting you to enter of the form.

The recent update to the state pension is for the beglian State pension only.

As  UK resident, the UKpensions would be taxable in the UK. 

Thank you.
Posted Mon, 15 Nov 2021 14:28:35 GMT by Birch
A great pity Seagull86 that the external links you posted were removed by Admin. I am sure they would have been helpful to those of us who cannot get to Belgium and would like to have an e-ID plus a one time code by email. As yet I have not found the appropriate email address to request an e-ID, although I have been obliged to send a copy of my passport and HMRC calculations for 2018-19 and 2019-2020, the result being that no Belgian tax will be taken until January of this year. It would be most helpful to be able to see MyMinfin and make tax declarations easier. I already take my photo with my passport open and a dated newspaper for the ONP to show that I am still alive. It is probably more secure than having their "Certificat de Vie" signed.
Posted Wed, 17 Nov 2021 13:01:15 GMT by Dunny1990
Please could HMRC admin posters advise when the manual at https://www.gov.uk/hmrc-internal-manuals/double-taxation-relief/dt3403 will be updated and become official guidance. In addition, some posters are under the impression that even though Belgian tax has not or will not be paid in 2018, they will still be able to reclaim UK tax paid on this income. Is this correct?
Posted Sat, 04 Dec 2021 20:44:15 GMT by John Goodall
HMRC Admin 2's post dated 12 November appears to have brought this on-going debate to a conclusion all turning on the definition that a 'Pension Scheme' does not include a 'state pension'. Writing as one who has been in receipt of 2 Belgian State Pensions since retiring and returning to the UK in 2008, the outcome from my standpoint is very far from satisfactory. At the time of my retirement I received about one third of my income from Belgium and two thirds from the UK. The fall in the value of Sterling since the Brexit vote in 2016, the triple lock on the UK state pension, coupled with much lower stock market returns, has almost reversed this position. In fact my UK income now falls almost entirely within the personal allowances and consequently I am now liable for little or no income tax on my UK income while my Belgian income is being taxed at about 27.5%. The amount of Belgian tax due aside, I am positively sickened that I am now obliged to pay tax to a country from which I am unable to draw any benefit. Taxes surely are paid in return for services rendered? What benefit can I derive in the way of services from Belgium while I am permanently resident in the UK? It may well be that there is little that can be done by way of negotiation should any country decide to tax non-residents by source of income rather than by residence. On the other hand it is totally disingenuous and utterly illogical from the UK's point of view that the outcome of such negotiations is to give away most or all of the tax on UK residents' income to another country. What kind of negotiation is that? From my standpoint, the outcome of this protocol to the convention is not so much a tax as a straight reduction of 27.5% in my Belgian State Pension rather than income tax as such. I can only be grateful that neither Belgium nor HMRC regard it as such, while the double taxation agreement allows me to avoid paying UK tax on my Belgian income, albeit at 20% rather than 27.5%. For the first time in my life I am shedding tears for HMRC (and my country)! Hopefully next time the protocol comes up for review HMRC will be more circumspect and open their negotiating position on the utterly unacceptable consequences of the present text!
Posted Thu, 16 Dec 2021 10:35:52 GMT by A Holden
Good morning John. I shall not know what I am being taxed until next year when I do the tax return. I have to admit, John, your 27.5% is also the type of tax rate that I am expecting. (Do they add a certain amount for commune tax?) Some other countries have also decided to tax pension income where it arises for non-residents, through their treaties. In the Belgian case, I did wonder if they decided to do this, because Belgium has had so many foreign workers in the past. (International Organisations). And they would all be taking the Belgian state pension away with them when they retire. So perhaps they need to get more taxation support to maintain their funding or something. Here is a link I found, I do not think it is HMRC that decides the treaty, it is some form of government body. https://www.gov.uk/guidance/uk-treaties#practice-and-procedures-for-new-treaties The very perplexing thing about this, is that it only seems to have come to light quite long after that protocol came into effect.... that Belgian returns were not being done correctly due to a misunderstanding on the wording of what a plan is! And to make it even worse, having discovered the mistake late, they then all decide and agree to go back and allow the re-opening of old Belgian returns (if that is what they are doing.) Another odd thing really, is that if we had had a deduction for the Belgian social security contributions from our wages when we earned them, then it would make more sense to claw back the tax when we retire,
Posted Thu, 16 Dec 2021 10:43:16 GMT by A Holden
Also to add. The big problem for people who have income from more than one country is the rate of exchange issue. It is very hard to plan, as you never know which way the exchange rates will go. I have only been receiving my small Belgian pension for the last 6 months and one month really stood out for a fluctuation in the wrong way..... and that was an oddity on the rate of exchange for that particular day when something must have happened in the markets. I hardly dare think how small my pension might be in the future! If I last that long! (And now inflation is biting....let's not go there.)
Posted Wed, 29 Dec 2021 02:08:13 GMT by HiFi
Thank you to everyone for contributing to this thread and relaying your personal experiences, which have all been very helpful. Now that it has been agreed that pre-2013 Belgian State Pensions are taxable only in Belgium, could an admin please confirm that it is no longer necessary to report them on the ‘Foreign Income’ pages of the tax return? I think I have read that the details should only be recorded on the ‘Any other information’ section of the main self assessment tax return… is this correct? Also, I’m still not quite clear how to claim a refund of UK tax paid in respect of these pensions. Following the link given to how to ‘Claim a Tax Refund’ do we choose the ‘Self Assessment Tax return’ or the ‘Foreign Income’ option? Going down the the ‘Foreign Income’ route is a bit confusing as it involves claiming Foreign Tax Credit Relief, which I’m not sure is appropriate in this case. Many thanks.
Posted Thu, 30 Dec 2021 15:16:20 GMT by HMRC Admin 2
Hi,

Pensions paid after 2013 would be subject to tax only in Belgium and would therefore not be reportable to the UK.

To claim tax back for previous years you would need to follow the guidance here:

Self Assessment tax returns

Thank you.
Posted Thu, 30 Dec 2021 15:43:37 GMT by Justme47
Information for HIFI I approached HMRC to explain about the double taxation and they told me I no longer need to complete a Self assessment online since Belgium are now taxing me at source. I still do not understand why the Belgians insist on including my UK incomes that they add to my Belgian pension and tax me on the total?!
Posted Thu, 30 Dec 2021 17:36:05 GMT by HiFi
Justme47 - thank you so much for your reply. We’ve filled in mum’s return as I thought fit and given all the relevant information, so if there is a problem I’m sure they’ll get back to us. That’s great that you no longer need to file a UK self assessment return. The Belgians won’t tax you on your UK income and I think you enter it on their final non-taxable income section. I think that they ask for your worldwide income so that they can work out what percentage is attributable to your Belgian source income. I’m not sure of the exact details but it might affect the rates at which they charge you tax and / or your personal allowance. I don’t quite know what the position is with mum’s Belgian Tax. We never had a reply after returning her tax return for last year and haven’t been sent another one, so I’m inclined to wait and see what will happen. Admin 2 - thank you very much for your response. It didn’t quite answer my queries, but I think I am reasonably clear on how to proceed. If I get stuck on re-claiming UK tax paid on mum’s Belgian pension, I’m sure that I will post here again. Happy New Year everyone…..

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