Tax on UK Military Pension

[964ST]

My Army pention is payed into the local Sparkasse since 2009 when I finished my service Here in Germany.
I then immediately started working for NAAFI which was a tax free income. Since last year I am unemployed but doing a 2 year training package in Germany.
So far I have paid zero tax in Germany but on my bank statements it just states that it’s law to declare any income over 12000 euros a year to the tax man.
what I am aware of is as soon as I do start a regular job the tax man will add my pention together with my income and adjust the tax code accordingly.
i am also aware that you are not obliged to fill in a tax return unless you are. Self employed but as soon as you fill one in on e you must carry on filling them out every year.

I am not self employed but registered as living in Germanland, I also pay German tax at an attrocially high rate (I am Steuer class 5 because my wife earns more than me and she pays class 3 so if we combined our incomes it would be collectively less tax to be paid). I have never freely done any Tax returns, BUT I do get a timely reminder every year that me as head of the household have a certain amount of time to submit the combined Tax returns of both myself and my wife, or I will receive a fine and still have to send them a tax return.

 

[Drlligaf]

Don't you have to declare it as part of your income declaration to the FZA

What the eye does not see, the heart does not grieve.
Apart from which, that money is tax liable in Britain, no ifs, no buts and no maybes. There is also the matter of a tax treaty between Gt Britain and the Federal Republic of Germany which limits tax liability to one country only. It's either all British every single penny or it's all German ever single Pfennig, cent, taler or whatever.
There's been enough dribble written on Arrse about sharing taxes or one party taking a small percentage to make up for an imaginery loss.
I was a member of a Lohnsteuerhilfeverein for many years and got qualified advice on all income tax matters, so I feel confident that I have done everything correctly.
For the 964STs benefit there is also the matter of Krankenversicherung. For reasons which I do not understand my health insurance doesn't take any contribution from my State Pension, not that I'm complaining.

 

[LeoRoverman]

I can state from experience (in retrospect) that
YES! You must declare your UK paid Military Pension on your German Tax Return when you submit it to the Finanzamt (it has some sort of weird name like ”Progression Vorbehalt” or something like that).

Mum finally got a pension from the Germans on the war service basis, cos she had to do her Landservice In the labour force and worked for a major in the Black Forrest. Upshot was they wanted the ins and outs and her cousin looked after that side for her. But she also had to declare it here.

 

[LeoRoverman]

What the eye does not see, the heart does not grieve.

True, but tax authorities have a rather crass habit of talking to each other with an alacrity they never seem to display in the case of the wealthy.

 

[Drlligaf]

True, but tax authorities have a rather crass habit of talking to each other with an alacrity they never seem to display in the case of the wealthy.

True. But that could be that the wealthy have lawyers who can make life hard for tax authorities who are getting a bit necky, whereas plebs like me would be inclined to cave in rather than risk the high costs of an appeal.

 

[LeoRoverman]

True. But that could be that the wealthy have lawyers who can make life hard for tax authorities who are getting a bit necky, whereas plebs like me would be inclined to cave in rather than risk the high costs of an appeal.

One feeds the other.

 

[964ST]

What the eye does not see, the heart does not grieve.
Apart from which, that money is tax liable in Britain, no ifs, no buts and no maybes. There is also the matter of a tax treaty between Gt Britain and the Federal Republic of Germany which limits tax liability to one country only. It's either all British every single penny or it's all German ever single Pfennig, cent, taler or whatever.
There's been enough dribble written on Arrse about sharing taxes or one party taking a small percentage to make up for an imaginery loss.
I was a member of a Lohnsteuerhilfeverein for many years and got qualified advice on all income tax matters, so I feel confident that I have done everything correctly.
For the 964STs benefit there is also the matter of Krankenversicherung. For reasons which I do not understand my health insurance doesn't take any contribution from my State Pension, not that I'm complaining.

I think that there might be a bit of confusion,
1. I am only talking about Germany.
2. As to what is Taxed and how it is split up into the various Kasses/etc. I have no clue about, as I am not blessed with any professional knowledge in this matter.
3. I got a letter from the Finanzamt in German (obviously!) which I will type out , and in a way that only an official German Letter can do, it is gibberish to me (and my wife who is German). My Steuerberaterin met several times with “Herr Ruhr” who drafted the letter, he also disclosed that he was aware that I had received my Pension since Sep 2005, and that I was not the only recipient of this type of letter “there were many more cases”. I got the feeling he was “witch hunting” and had made this topic his speciality.
4. The Aktenzeichen is titled RBST, mmh!! Royal Bank Scotland Tax (nah couldn’t possibly be?)

——————————————————————————————————————————————
Letter Content:-

“Sehr geehrter Herr Jock Macplop (name changed)

mir ist bekannt geworden, dass Sie im Jahr 2014 Einkünfte aus Ruhegehalt/Pension aus Großbritannien bezogen haben, deren Versteuerung möglicherweise unterblieben ist.

Nach § 90 Absatz 1 der Abgabenordnung (AO) sind Sie zur Mitwirkung bei der Ermittlung dieses Sachverhalts verpflichtet. Da es sich um einen Sachverhalt mit Auslandbezug handelt. Haben Sie im Rahmen erhöhter Mitwirkungspflichten nach § 90 Absatz 2 AO diesen Sachverhalt aufzuklären sowie die erforderlichen Beweismittel zu beschaffen und dabei alle für Sie bestehenden rechlichen und tatsächlichen Möglichkeiten auszuschöpfen. Kommen Sie dieser Verpflichten nicht nach, ist die Finanzbehörde befugt, gegebenenfalls bei anderen Personen Auskünfte einzuholen (§ 93 Absatz 1 AO) und/oder die Besteuerungsgrundlagen zu schätzen (§ 162 AO)”

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@Drlligaf If your Lohnsteuerhilfeverein experience can advise me how to get this bloke of my back (and more importantly how to advise German Ex-pats who have spent a fortune in Germany on Beer, Taxis, Restaurants etc. in the 80,s and 90,s from being robbed!) then I welcome your input.

 

[964ST]

On a much shorter note,

They had my “Xafinity paymaster” P60 End of year certificates with all the details of UK tax codes etc.

 

[SkippedOnce]

The dual tax agreement means that you can't be taxed on the same income twice. Regardless of what the tax rate is. Government pensions are taxed at source in UK so can't be taxed in another EU country.

Do I detect a potential problem?

 

[Drlligaf]

I think that there might be a bit of confusion,
1. I am only talking about Germany.
2. As to what is Taxed and how it is split up into the various Kasses/etc. I have no clue about, as I am not blessed with any professional knowledge in this matter.
3. I got a letter from the Finanzamt in German (obviously!) which I will type out , and in a way that only an official German Letter can do, it is gibberish to me (and my wife who is German). My Steuerberaterin met several times with “Herr Ruhr” who drafted the letter, he also disclosed that he was aware that I had received my Pension since Sep 2005, and that I was not the only recipient of this type of letter “there were many more cases”. I got the feeling he was “witch hunting” and had made this topic his speciality.
4. The Aktenzeichen is titled RBST, mmh!! Royal Bank Scotland Tax (nah couldn’t possibly be?)

——————————————————————————————————————————————
Letter Content:-

“Sehr geehrter Herr Jock Macplop (name changed)

mir ist bekannt geworden, dass Sie im Jahr 2014 Einkünfte aus Ruhegehalt/Pension aus Großbritannien bezogen haben, deren Versteuerung möglicherweise unterblieben ist.

Nach § 90 Absatz 1 der Abgabenordnung (AO) sind Sie zur Mitwirkung bei der Ermittlung dieses Sachverhalts verpflichtet. Da es sich um einen Sachverhalt mit Auslandbezug handelt. Haben Sie im Rahmen erhöhter Mitwirkungspflichten nach § 90 Absatz 2 AO diesen Sachverhalt aufzuklären sowie die erforderlichen Beweismittel zu beschaffen und dabei alle für Sie bestehenden rechlichen und tatsächlichen Möglichkeiten auszuschöpfen. Kommen Sie dieser Verpflichten nicht nach, ist die Finanzbehörde befugt, gegebenenfalls bei anderen Personen Auskünfte einzuholen (§ 93 Absatz 1 AO) und/oder die Besteuerungsgrundlagen zu schätzen (§ 162 AO)”

—————————————————————————————————————————————-
@Drlligaf If your Lohnsteuerhilfeverein experience can advise me how to get this bloke of my back (and more importantly how to advise German Ex-pats who have spent a fortune in Germany on Beer, Taxis, Restaurants etc. in the 80,s and 90,s from being robbed!) then I welcome your input.

Will translate and send via PM.
Basically the bloke is fishing.

 

[964ST]

I also found this

——————————————————————————————————————————————-


The principle of the OECD Model Tax Convention on Income and Capitalis to avoid double taxation of individuals with income in multiple member countries. The problem is that different tax regimes in the different countries calculate the taxes due differently. Article 23A of the treaty does not provide for a "full exemption" system, but is rather, an "exemption with progression" system (Paragraph 3), which the Germans translate to "Progressionsvorbehalt". In essence (but very simplified) they take your worldwide income and apply exemptions or deductions allowable in Germany to calculate your taxable income and therefore tax due. Any tax already paid in other member states is taken into account, but due to the higher total level of income, different allowances and probably higher rates of taxation, additional tax may be payable in Germany. It would seem this is what you are being called on to pay.



Irrespective of the reason for non-payment you will be expected to pay interest on unpaid tax for previous years on the basis that you had the money in your bank account and could have been earning interest on it yourself when it in fact should have been paid in tax. You are simply paying this interest to the Finanzamt as if they had earned it. Should they have owed you money, then they pay interest to you too.

—————————————————————————————————————————————-

“What crock of SHIZER!”

 

[exbleep]

Do I detect a potential problem?

Dual taxation agreements are between countries, not blocs. The dual tax agreement is between UK and Spain or UK and Germany and not between the UK and EU so won't be affected by any of the treaties UK withdraws from next year.

The agreements that Spain have signed are listed on the Spanish tax office website which goes far beyond the EU.
As can be seen here Double Taxation Agreements Signed by Spain

More an international thing.

 

[Drlligaf]

The dual tax agreement means that you can't be taxed on the same income twice. Regardless of what the tax rate is. Government pensions are taxed at source in UK so can't be taxed in another EU country.

Exactly. Although the tax treaty has nothing to do with the EU, therefore Brexit has no affect. At least that is what my tax advisor assured me verbally.

 

[exbleep]

I also found this

——————————————————————————————————————————————-


The principle of the OECD Model Tax Convention on Income and Capitalis to avoid double taxation of individuals with income in multiple member countries. The problem is that different tax regimes in the different countries calculate the taxes due differently. Article 23A of the treaty does not provide for a "full exemption" system, but is rather, an "exemption with progression" system (Paragraph 3), which the Germans translate to "Progressionsvorbehalt". In essence (but very simplified) they take your worldwide income and apply exemptions or deductions allowable in Germany to calculate your taxable income and therefore tax due. Any tax already paid in other member states is taken into account, but due to the higher total level of income, different allowances and probably higher rates of taxation, additional tax may be payable in Germany. It would seem this is what you are being called on to pay.



Irrespective of the reason for non-payment you will be expected to pay interest on unpaid tax for previous years on the basis that you had the money in your bank account and could have been earning interest on it yourself when it in fact should have been paid in tax. You are simply paying this interest to the Finanzamt as if they had earned it. Should they have owed you money, then they pay interest to you too.

—————————————————————————————————————————————-

“What crock of SHIZER!”

Hmm. Almost the same from Blevin Franks solicitors. This one in regard to Spain and the double tax agreement

Under this treaty, certain UK pensions are exempt from taxation in Spain. This concerns Government Service pensions (mainly fire, police and civil service, armed forces and local authority pensions, but not NHS).

Note however that the amount of Government Service pension received must now be included in the calculation which determines how much tax you owe in Spain. This is called ‘exemption with progression’. So although this pension income is not taxed in Spain, this effectively means that your other income which is directly taxable in Spain (e.g. other pension and rental income) may be pushed into higher rates of tax, often resulting in larger tax bills.
Other pension income such as UK state pension and occupational pensions are taxable only in Spain, provided you are resident in Spain.

The UK will continue to deduct tax at source from UK pension income (except for UK state retirement pension which is always paid gross) until they are satisfied you are both resident and paying tax on this income in Spain.

Pretty much what I said earlier, the mil pension is exempt from tax but it is added to other income to determine the tax level which you pay.
Not taxed on the pension but possibly a higher tax rate on any other income.

 

[964ST]

Will translate and send via PM.
Basically the bloke is fishing.

Well he is good and he has caught a ”wobbly old smelly jock”.

 

[exbleep]

Exactly. Although the tax treaty has nothing to do with the EU, therefore Brexit has no affect. At least that is what my tax advisor assured me verbally.

Yes, I probably didn't put that very well. It's just that all countries in the EU have a double tax agreement, not that it's a EU directive.

 

[kelvin_273]

Well he is good and he has caught a ”wobbly old smelly jock”.

Just got my girlfriend to translate it and it appears to be, as described above, fishing with a lot of gobbledegook.
She actually employs an accountant to sort out her own tax affairs even though she's employed as a schoolteacher. It's a complicated business even for people with regular jobs.
I'll be making an appointment with him for some advice shortly.

 

[SkippedOnce]

Dual taxation agreements are between countries, not blocs. The dual tax agreement is between UK and Spain or UK and Germany and not between the UK and EU so won't be affected by any of the treaties UK withdraws from next year.

The agreements that Spain have signed are listed on the Spanish tax office website which goes far beyond the EU.
As can be seen here Double Taxation Agreements Signed by Spain

More an international thing.

I hope you're right, but in any case, to now cite Uk and EU is a busted flush.

 

[964ST]

Just got my girlfriend to translate it and it appears to be, as described above, fishing with a lot of gobbledegook.
She actually employs an accountant to sort out her own tax affairs even though she's employed as a schoolteacher. It's a complicated business even for people with regular jobs.
I'll be making an appointment with him for some advice shortly.

Get your missus to look into “Progressionvorbehalt”.

I am pretty sure that my situation was “Hooked” cause I have a UK bank account and I had a German contact telephone number, they flag it as suspicious and you are sent a questionnair, asking WHY, If so do you have a Tax code for the country that your telephone corresponds too. To lie would be be potentially incriminating.

 

[LeoRoverman]

Will translate and send via PM.
Basically the bloke is fishing.

Strikes me that way too.