Universities and Colleges Superannuation Scheme and Taxation in Germany under the UK-German DTA

Under the UK-Germany DTA, I believe that I am correct in seeing from HMRC guidance at https://www.gov.uk/hmrc-internal-manuals/international-manual/intm343040 that the Teacher's Pension Scheme (used by post-1992 universities as well as schools and colleges) is considered as "government pension" for the purposes of the DTA, and therefore is not normally taxable in Germany. However the Universities and Colleges Pension Scheme (USS) is not classified as a Government pension. My German tax adviser is asking whether the USS pension can be considered as a "social security pension" under the DTA? And if so, with I think the implications, that is therefore is normally not taxable in Germany.

Hi
No this cannot be considered a social security pension.

Would this be the same under the DTA for Portugal for a USS pension?

Hi G Brett,
Yes,  as it is not a social security pension for any country. 
Thank you. 

In my understanding then, which I would be grateful if could confirmed: following the posts on this matter by HMRC10 and HMRC25, since this will be potential relevance to ALL those who are in receipt of USS pensions but living outside of the UK and subject to taxation in another country, it seems that: (1) it will be necessary to pay tax on such a pension in the country concerned (which depending on the country may be at higher or lower rates than basic rates or higher rates in the UK) but also (2) if, in between, the USS has already deducted tax at source in the UK, it will be possible, under any DTAs that cover this to (a) request HMRC to repay the tax already paid in the UK and (b) to request HMRC to notify the USS to in future not deduct tax at source on these pension payments unless and until the recipient no longer becomes subject to tax in the other country concerned? Is this correct?

Thank you for your response, would it then be treated as a "Private Pension" in Portugal and subject to the DTA agreement?

Subsequent to my post of five days ago, I see from the HMRC double tax relief application form for Germany that, in relation at least to the UK-German DTA (and of course may not be the same in other DTAs) that: "Relief from UK tax under Article 17(1) will only be available for pensions that do not exceed the limits on contributions in Article 17(3). These limits mean that a UK-source pension or annuity paid to a resident of Germany will remain taxable in the UK if the tax relieved pension contributions were made in the UK for more than 15 years – unless the relief on the contributions has been clawed back, or the contributions also got tax relief for more than 15 years in Germany." So am I correct then in thinking that this means that, even though the USS is considered a "private pension" and therefore normally taxable in Germany for someone who is subject to German taxation requirements but with the possibility of reclaiming double tax paid in the UK and stopping future UK payments of tax at USS source, that such would then NOT apply if one had paid into the USS for more than 15 years? - and in which case, even though a "private pension", it would be payable ONLY in the UK.

Hi,

The UK / German double taxation agreement, advises that if a resident of the UK, is in receipt of a pension, annuity or other similar remuneration, arising in Germany, they are only taxable in the UK on this source. This is a reciprocal agreement, so if a resident of Germany, has a UK arising pension, annuity or other similar remuneration, it is only taxable in Germany.  

Any tax deducted in the country, where it is not taxable, would need to be reclaimed by the individual from the relevant tax authority.  If the pension is not taxable in the UK, then you would complete a form:

Double Taxation: treaty relief (Form DT-Individual (Germany))

and send it to the German tax authorities to validate. They would return it to you and you then send to HMRC, using the address on the form.

Thank you.

 

Hi G Brett,

Yes it is a private pension and subject to the DTA.
You would need to submit a claim for relief in the UK - Double Taxation: Treaty Relief (Form DT-Individual).

Thank you.

Hi Paul Weller,
Article 17(3) advises that if your pension, similar remuneration or annuity arising in Germany, which is attributable in whole or in part to contributions which, for more than 15 years in Germany, did not form part of the taxable income from employment or were tax-deductible or were tax-relieved in some other way; then they are taxable only in Germany.
As double taxation agreements are reciprocal, the same applies to the UK.
Thank you.