Gary C

This is not an HMRC question and I am not sure that you have quite finished the "hard work" you mention. RiA is the German tax office and, unsurprisingly, deals only with tax, not claims for state pensions - that is dealt with by the Deutsche Rentenversicherung (DRV) Bund in Berlin, BUT if you are UK resident you claim that pension via DWP International Pension Centre in the UK. They send you a form CFN901, which, once returned, enables them to pass your claim and UK NI record to Germany. If you have at least 35 years of UK and German social security records, then you can claim your German pension at 63, albeit reduced by 0.3% for each month it is taken before normal pension age. All a question of maths... You might also find that your German pension will be higher than you think because of how their pension system interacts with the EU regulations on pensions but that depends on your work/non-work history and is for DRV to explain. I fear also, that you have misconstrued the German tax rules. The starting point is that you are subject to limited liability taxation as a non-resident. This means that 100% of your income arising in Germany is taxed without recourse to any allowances or reliefs, other than a Werbungskostenpauschal für Rentner of 102€, i.e. the Grundfreibetrag is irrelevant as you do not qualify to get it. The 102€ will be deducted automatically from the taxable element of your pension when your tax assessment is issued each year. Deferring your UK pension is, in my view, generally not a good idea as you forego 100% for the deferral period in return for 1% more pension per 9 weeks of deferral going forward. Again, a question of maths but payback is the best part of 17 years... As far as German tax is concerned, there is a special rule which says that if at least 90% of your income is German-source, OR your income that is not subject to German taxation is less than the Grundfreibetrag, then you can elect to be treated as if you were tax resident in Germany (a tax fiction) and thus gain access to all allowances and reliefs. However, this is an annual election based on your income in each German tax year, which is of course January to December, not April to April. Also, all of your UK income would then feed into the rate at which you pay tax on your German-source income, even though it would not be taxed, and it uses up the Grundfreibetrag in the process, so any tax saving can be tiny. You only need to prove your UK income if you are making this election because it is otherwise of no interest whatsoever to the German tax authority. So, whatever it is you think you may gain by deferring your UK pension to somehow gain an advantage looks to me like a complicated and potentially fruitless nightmare. Subject to the aforementioned election, Germany has no interest in your UK income and simply takes the taxable element of your pension, deducts 102€ and sticks the balance into their tax calculator. There are plenty of German tax websites that give you tax calculators but as a non-resident, you have to add the Grundfreibetrag to the taxable part of your pension for them to work - the same goes for the official tax office calculator on their website. This is because the German tax tables assume you have access to the Grundfreibetrag, even if you don't. I would respectfully suggest you have another read of the RiA website (the German version is more comprehensive but the English version gets better every year) to understand the tax issues you will be facing. I would also suggest having a chat with the International Pension Centre to move you forward in terms of the hard work... As to your bonus question, the answer is "it depends". A Euro account is good if you want to spend some of the money in Euros, or want to manage when you convert it to pounds but neither has a bearing on your tax.

You should of course check this with a German tax adviser but my understand is that where Article 17(3) does not apply to override Article 17(1), i.e. you have not paid into the pension for at least 15 years, etc etc, the full pension amount is taxable in only Germany by virtue of Article 17(1) and reportable on Anlage R-AUS to your German Tax Return - Germany does not recognise the concept of a tax-free pension lump sum, irrespective of how the UK may choose to tax pensions. If Article 17(3) would apply because you have paid into the pension for more than 15 years, etc etc my understanding is that Germany would still consider that test to be failed, and therefore retain its taxing right,s if you have taken a 25% lump sum. This is because the UK exempts that 25% from tax, meaning the pension as a whole is not "effectively taxed", i.e. not subject to tax. It would be interesting know if the UK considers that the Article 17(3) conditions would not be met in those circumstances, meaning the UK has to give relief on the full pension, or whether the UK position is that the lump sum and the remaining 75% are treated separately for treaty purposes - this is a hot topic on some forums I read and the view of German tax advisers is that Germany would consider that Article 17(3) does not apply in those circumstances to override Article 17(1), i.e. the pension must be viewed as a whole and is part is exempted from tax by the UK then the effectively taxed test is failed.

Have a look at the double taxation treaty, which says that the Canadian state (social security) pension will be taxed only in the UK. It is likely you will be required to submit a Self Assessment tax return and foreign pages. 

Thank you but can you explain the rationale behind this, given that HMRC has responsibility for National Insurance and the requirements that need to be met to pay voluntarily at Class 3 as well as Class 2? What is it that differentiates between being "not close to" and being "close to or over", pension age? Is there a particular expertise in DWP, or do they still liaise with you on the National Insurance legislation? It just seems an unnecessary and potentially confusing syb-process.

Can you please confirm the position of a person who lives or lived abroad and who wants to fill gaps in their NI record but is within 6 months of reaching UK pension age, or has already claimed their UK state pension? Do they still send CF83 to HMRC to establish the years they can pay and the Class of NI they should pay, after which they speak to DWP Future Pension Centre or the Pension Service, to establish which years will improve their pension, or is the process different, as someone suggested to me recently? That person suggested they had been told by HMRC that they should not submit a CF83 but should simply contact the Pension Service.

Susan T, I am surprised to hear what you say about the German tax authority saying a tax assessment is not acceptable. I assume you are UK resident and need the form to substantiate a claim to be treated for German assessment purposes as subject to unlimited liability taxation? If so, the RIA tax office website states clearly that a tax assessment, i.e. the tax calculation part of your SA return should suffice. It was certainly that way until 2022 and the website is unchanged. If you are not claiming the above then you shouldn't need the form at all as your UK income is irrelevant but if you are tax resident in Germany then you local tax office may have different procedures...

As a slight aside, have you elected to have the RiA assess you absent a tax return each year (Amtsveranlagung)? And have you set up a SEPA Direct Debit mandate with them to enable them to take any tax due on the, up to 5 dates a year? Both are worth considering in my opinion as the recipient of a German pension...

I am in a similar position, though I have a couple more months to get things sorted. Normally my record is updated in early summer to show the position to the previous April but this year, of all years, that is not yet the case! HMRC Admin 20, your reply to Pesi is not overly helpful. I have a PTA and have today checked my record and ability to pay voluntary years. Given that my 2023/24 record has not been updated yet - it will show not full when it is, as I retired from work several years ago and have paid only voluntary NI since then - I could only pay years up to and including 2022/23 which I have done today. So, the question is, when will our 2023/24 records show as updated on our record/PTA, so that we can (hopefully) then use the online functionality to also pay 2023/24. In my case I know I need to pay that year to achieve my maximum pension and have already had the required discussion with DWP.

Hi suttmap Suttmann 4.3% German tax sounds wrong to me as non-residents do not qualify for the personal (or any other) allowance unless they can elect to be treated as resident for assessment purposes (a tax fiction) if, either, 90% of their worldwide income is from their German pension, OR, the income that is not taxable in Germany is less than the German Grundfreibetrag. See Section 1(3) EStG (German Income Tax Act) If an election is not possible, then I would expect the tax rate to be upwards of 14%, whereas if an election has been made the 4%+ could be OK.

HMRC Admin 20 Response If Monica's mother's pension started before the new treaty came into effect, then it would have been taxable only in the UK until the new treaty came into force. Her question was, given that her mother had continued to report the pension to the UK after that date, can, or should, an Article 35(2) election be allowed/inferred to continue to old tax treatment. After all, it seems that until this issue was raised, neither fisc was certain how it should be taxed.