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HMRC internal manual

International Manual

From
HM Revenue & Customs
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DT Agreements: Germany - Income from a UK source paid to a resident of Germany

UK Government pensions paid to a resident of Germany

No relief is available from UK tax on a ‘government’ pension (see INTM343020).

The definition of “government” pensions in this DTA (see Article IX) isdifferent from usual. It does not require that the pension has to be paid in respect of servicesrendered in the discharge of governmental functions. This means that pensionspaid to employees of the National Health Service, Supplementary Pensions for OverseasService (SPOS) and other pensions paid out of UK public funds (except NIRPs) are regardedas “government” type pensions and are not relievable from UKIT under theDTA.

The DTA provides for such pensions to be exempt from tax in Germany except where they arepaid to a German national who is not also a UK national. In that situation both countrieshave the right to tax the pension, but credit for the UK tax payable should be givenagainst the German tax payable. See Article XVIII(2)(b)(ii)) of the DTA.

Although the treaty provides for pensions that are paid by the UK Government to be exemptfrom German tax it is still possible that Germany may wish to take these amounts intoaccount when calculating the appropriate rate of German tax that is chargeable on aresident of Germany. You should not comment on the way in which an individual will betaxable in Germany. That is a question for the German authorities to answer.