UK Company Pensions - UK Citizen with residence in Austria

In 2025, I intend to retire in Austria. I will take the option of the tax free lump sum (25%) and take a monthly pension income. I assume I will be taxed at source on the monthly pension in the UK. How does Austria treat UK income from a lump sum and monthly pension? Thank you David Madeloff

Hi,
You would need to check this with Autralian Tax authorities. Please see the link below
Coming to Australia or going overseas | Australian Taxation Office (ato.gov.au)
Thank you

Hello, You wrote Australian tax authorities. My question relates to Austria. Can you advise, please . Thank you

Hi,
Please have a look at pargraphs 1 and 2 of article 17 of the UK / Austria tax treaty, covers pensions at:
UK/Austria Double Taxation Agreement
For residents of Austria in receipt of a UK pension, the pension is only taxable in Austria, but lump sums are only taxable in the UK.
Thank you

Thank you Admin 34, I have UK company pensions that will provide me with a monthly pension and a lump sum on retirement. Therefore, as I am a resident of Austria the lump sum is only taxable in the UK and the monthly pension is only taxable in Austria. Is my understanding correct? Will I have to ask the UK company pension providers to pay me the monthly pension without tax? or is this done automaticaly as they are aware that I`m a resident of Austria? Thank you David Madeloff

David, You may already know this but income that is not taxable in Austria because it is exempted under the DTA, must be included in your tax return as it feeds into the rate at which you pay tax on your income that is taxed in Austria. See Article 21 (1)(b).

Hello Gary, Thank you. Please can you clarify the two examples below: Example 1. I receive 25% of my UK company pension as a lump sum tax free. Nevertheless, I have to declare this in my Austrian tax return. Example 2. I receive a monthly UK company pension without UK tax. I have to declare the amount I received in my Austrian tax return and this is taxed in Austria Thank you David

Hi,
Please refer to Tax on your UK income if you live abroad
Thank you.

Hi David, Example 1 is correct. In that case the DTA awards taxing rights only to the UK so exempts the income from being taxed in Austria. In such cases Article 21(1)(b) of the DTA says, "Where [...] income derived by a resident of Austria is exempt from tax [in Austria], Austria may nevertheless, in calculating the amount of tax on the remaining income of such resident, take into account the exempted income." What that means is that the tax rate applied to your other income will increase to the rate that would be applicable to a person who had the same amount of total income arising only in Austria. So, if you had 30,000€ taxable in Austria and 10,000€ exempted by the DTA and taxable only in the UK, your worldwide income would be 40,000€ and the rate of tax applied to your 30,000€ that is taxable in Austria would be the same as that applied to a person whose taxable income was 40,000€. This referred called Progressionsvorbehalt and the 10,000€ exempt income will go into a special box on, or an "Anlage" to the tax return. You'll need to ask the Austrian FA or your tax advisor how to do that. Example 2 is correct if you mean that you receive the income without UK tax because the DTA awards taxing rights only to Austria. In that case, the income is simply part of your worldwide income and will go on your Austrian tax return as foreign income and be subject to Austrian taxation. Progressionsvorbehalt is not relevant here because the sum is fully taxed in Austria. Does this help?

Hi Gary, Thank you for the information. Regarding example 2: Receiving a UK company monthly pension free of U.K tax was my understanding. However, I just received feedback from one UK company pension provider -> They would tax my monthly pension at the basic UK tax rate, until the HRMC informed them otherwise. In other words it would be taxed in the U.K. So now I`m confused? If my monthly UK pension is taxed in the UK, how is the Austrian tax authority informed that I paid tax in the UK? Thank you David