We have found that British expats considering UK pension transfers in Germany who look at the Double Tax Treaty between the UK and Germany assume that the pension will be taxed at the point of retirement.
Normally, Double Tax Treaties do exactly that, but often the devil is in the detail which is true in this case.
UK Pension Transfers In Germany- Taxation
So, given the Double Tax Treaty wording in the link above, would you be correct to assume the sentence above is correct? Let us help you if you live in Germany but have a British pension.
For the purposes of this blog, we are talking about UK personal pensions and UK SIPPs and not final salary pension schemes(which we will come back to).
If an investor has a UK personal pension into which tax relieved money was paid for over 15 years while in the UK, then Article 17(3) of the Double Tax Treaty states that the tax would be payable in Germany in the same way as other income.
A personal pension or SIPP (that allows a client to select their own funds) that has less than 15 years of tax relieved UK contributions could be taxed just like any investments on gains and income annually- and not just at retirement. This raises the question- what about those who are resident in Germany and transferred their final salary pensions into a SIPP or International SIPP?
Please note that we are not tax advisers, and do not give tax advice ourselves. We have spoken to a German tax adviser who explained how the German Tax Office may apply taxation to UK pensions. We recommend that anyone with a UK pension, or those considering UK pension transfers in Germany, really ought to take professional tax advice BEFORE transferring.
Those that have already transferred need to know if they have to declare past growth and those considering a transfer need to check the implications prior to transfer.
Bottom line, if your overseas adviser is recommending a transfer for tax or currency reasons, make sure they have considered this article and the tax points within it. Alternatively come and talk to us and we will help find a tax adviser, and will follow their advice on any advice provided to you about a UK pension transfers in Germany.
Article Date 24th November 2020
The views expressed in this article are not to be construed as personal advice. You should contact a qualified and ideally regulated adviser in order to obtain up to date personal advice with regard to your own personal circumstances. If you do not then you are acting under your own authority and deemed “execution only”. The author does not except any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation.
- Ex-DeVere duo fined by US regulator over transfers of British Pensions to QROPS
- QROPS in the UAE
- A QROPS Helps Save Tax
- British Pension transfers for US Citizens
- Double Taxation Treaties as part of Expat Financial Advice
Share this story