Gary C

As I understand it, HMRC will tell you which years are not full and the cost of filling them. However, it is DWP who tell you how many of the years 2006/07 will improve your forecast, and also how many of the years 2016/17 onwards will increase your pension up to a final year that is likely to be capped at the maximum. This is why HMRC say to follow the guidance from DWP when considering which years to pay.

Roger Williams, I can understand your frustration but the wording in Article 23 is common across many DTAs and is explained in detail in the commentary to the OECD model DTA on which most DTAs are based. If you search on that you can read the reasoning. Each country has its own domestic tax legislation and Germany's determines your tax rate by reference to your worldwide income, irrespective of whether that income is exempted by one or other DTA they have with other countries. Similarly, lump sum pension payments or ISA interest that are tax exempt in the UK are not recognised as such under German legislation and are fully taxable. You really would need to lobby German political representatives to change such laws.

There would appear to be a wider issue here in that Spencer would be taxable in his country of residence on all of his UK income, subject to any double tax treaty stipulating to the contrary. He may therefore need to apply for a NT code to receive his pension gross but that would depend on where he is resident and what any double tax treaty says - or am I missing something?

HMRC Admin 25, While what you say is correct, you need to read what Roger Williams actually asks, "In these circumstances can my UK Government Pension be taken into account by the German tax authorities to determine how much tax I pay in Germany?" That is not the same as "Can my Teachers' Pension be taxed by Germany?" The answer to his question is "yes", because of Article 23(1)(d) in the DTA, and section 32b of the German Income Tax Act, which I quote above. Germany does not tax the income but takes it into account when setting the rate of tax on the income they do tax. I know of a number of people who have found themselves "in correspondence" with their German tax office for failing to report UK income that is exempted from tax in Germany by the DTA - a potentially expensive mistake! For example, if a German resident (without citizenship) had income of 50,000€ arising in Germany, then for 2024 they will pay 10,906€ tax - an effective tax rate of 21 .81% (the German system is not a slab system like the UK's). If, instead, they had 30,000€ arising in Germany and a 20,000€ UK Government Service pension, taxable only in the UK, their 30,000€ would NOT be taxed at the rate applicable to 30,000€ (14.82%) but at the rate applicable to 50,000€ (21.81%). They would therefore pay tax of 6,543€, not 4,446€ - a difference of 2.097€. This is not the same as taxing the income in Germany: it is the German government saying that a person's tax rate should be measured by reference to their worldwide income, even if some of that income is exempt from tax under a double tax agreement. This is why the income is reported on a special Annex to the tax return. In reality this is a matter for Roger to take up with his German tax adviser, or the German tax office, as Germany is doing no more than the DTA and their domestic legislation provide for. I cannot post links but he may like to search his tax authority website for "Progressionsvorbehalt-Rechner" (it is certainly on the Bayern Tax Office site) where he will be able to see the impact on his German tax rate of having a UK Government Service pension, or UK property rental income, or a UK State Pension for that matter...

HMRC Admin 25, While the income is not taxable in Spain (as you set out), it will need to be declared in Spain for the purposes of Article 22(1)(b). This does not mean the income is taxable in Spain, or that person will apply for tax exemption from HMRC - quite the contrary! The issue is the same in Germany, where the UK/Germany DTA has the same provision in Article 23(1)(d). Germany requires a person to report income that is exempt from German tax under a DTA but which is required for the purpose of setting their tax rate by virtue of Article 23(1)(d) using Anlage AUS (Annex AUS), line 36. Spain will, no doubt, have a similar box on its tax return. How else would they be able to operate Article 22(1)(b) through their domestic legislation? Beiderbeck Dunleath will need to consult their Spanish advisers to ensure their Spanish tax return properly reports the income in question.

Your UK interest is taxable only in Germany (Article 11 of the DTA). Unfortunately, this includes anything in ISAs, as it is just interest from the German perspective. Germany, of course, has a 1,000€ allowance for capital income.

Yes - it's called Progressionsvorbehalt, governed by §32b of the Einkommensteuer Gesetz. Article 23(1)(d) of the UK/Germany double tax treaty says: "Germany, however, retains the right to take into account in the determination of its rate of tax the items of income and capital, which are under the provisions of this Convention exempted from German tax." You need to enter any UK income that is not taxable in Germany on Anlage AUS, line 36.

I fail to see your problem. You LGPS is taxable only in the UK (assuming you do not have Spanish citizenship) and your UK state pension is taxable only in Spain. However, Spain reserves the right, in Article 22(1)(b) of the DTA, to look at your gross worldwide income when setting its tax rate. The outcome is that your UK state pension together with your other income that is taxable in Spain, are taxed at the tax rate that would apply if the LGPS pension was also taxable only in Spain. This has nothing to do with Article 18, or DT Individual (Spain), so far as I can see. As mentioned, this is set out in clearly in Article 22(1)(b): "Where in accordance with any provision of the Convention income derived or capital owned by a resident of Spain is exempt from tax in Spain, Spain may nevertheless, in calculating the amount of tax on the remaining income (or capital) of such resident, take into account the exempted income or capital." I don't know what the Spanish tax return looks like but imagine there is a box or annex that allows you to report income that is exempted from Spanish tax by reason of a DTA for the purpose of establishing the rate of tax applicable to the income that is taxable.

No, I am not an HMRC employee - I am simply reading the treaty. Italy, which has primary taxing rights over the worldwide income of its residents, is doing no more than applying its tax laws and the treaty. Double taxation is avoided by giving relief for tax paid in the UK. The fact that the UK tax is less than the Italian tax is of no relevance. I am sure HMRC will correct me if I am wrong.

Sounds as though Italy is doing what the double tax treaty says. Have a look at Article 6(1) or the link from HMRC in the post above yours. The UK can tax the income as it arises in the UK and Italy can tax the income as you are resident and it is part of your worldwide income. Italy would then give relief for the tax you have paid in the UK - no double taxation there.