Is my UK pension taxable in Germany

[Bogies 6]

KK contributions and UK military pensions

Started by GaryC, 27 Oct 2020

I know that this is an old post, but in my case quite actual. Did this ever go anywhere.?.

The KK said that pensions paid by EQ are subject to the full KK Beitrag whereas the UK Social Pension, is subject to only 50%. Any explanation as to why the difference. ?

[Bogies 6]

43 minutes ago, Bogies said:

Any explanation as to why the difference. 

I'll probably answer my own question here, but still need help as to understanding why,  1.

§ 228 Rente als beitragspflichtige Einnahmen. UK State Pension.

Only half of the Krankenversicherung is paid. And why 2.

§ 229 Versorgungsbezüge als beitragspflichtige Einnahmen. Military Pension.

The full Krankenversicherung is paid. And why are payments from EQ (Army Pension/Rente) classed as Versorgungsbezüge and not "Rente" I expect it's a German language problem. As one is a State PENSION and the other is a Military PENSION. Aren't both, Vergleichbare Renten aus dem Ausland?

[optimista 5,934]

This thread is mind-boggling.   Bordering on the fascinating.

I have to exteriorise my frustration somehow and cannot restrain myself from being that small boy in The Emperor's Clothes. Again. But hell, here goes:

@ Bogies: you have a really nasty handle. Why?

 

 

[Bogies 6]

8 minutes ago, optimista said:

This thread is mind-boggling.   Bordering on the fascinating.

I have to exteriorise my frustration somehow and cannot restrain myself from being that small boy in The Emperor's Clothes. Again. But hell, here goes:

@ Bogies: you have a really nasty handle. Why?

 

 

What . Actually, I'm quite a nice person, trying to understand life and its complications. Been out and away from home for too long. . 

[optimista 5,934]

I am sure you are a lovely person, which is why your handle completely floored me.

[GaryC 411]

5 hours ago, kiplette said:

There was some rumour a while back that Equinity Paymaster payments can't be used for KK payments, I think user GaryC reported having had a conversation on that topic with some retired Major. No idea how that plays out in reality.

 

Round here where most of the Brits are ex-Forces, people generally pay the whole whack, afaik.

 

The business of the exchange rate is an actual bugger and very unfair.  

I had forgotten that post - and I cannot recall where the other forum was (must be getting old).  It wasn't a conversation as such but trying to find out why said Major was making those allegations/suggestions.  As I say in the thread on here, I decided not to poke the other hornets' nest any more, leaving it to those potentially impacted to do the poking themselves via their local RBL branch(es).

 

[PandaMunich 16,909]

7 hours ago, Bogies said:

When doing the tax return, do I declare the amount which has landed on my bank account from EQ for 2022

Yes.

3 hours ago, Bogies said:

KK contributions and UK military pensions

Started by GaryC, 27 Oct 2020

I know that this is an old post, but in my case quite actual. Did this ever go anywhere.?.

The KK said that pensions paid by EQ are subject to the full KK Beitrag whereas the UK Social Pension, is subject to only 50%. Any explanation as to why the difference. ?

 

Did you read my post in there?

 

2 hours ago, Bogies said:

still need help as to understanding why,  1.

§ 228 Rente als beitragspflichtige Einnahmen. UK State Pension.

Only half of the Krankenversicherung is paid.

Because they are doing you a favour by treating it as if it were a German social security pension paid out by DRV, where your Krankenkasse actually still charges 100% of the contribution, but DRV pays a subsidy of 50% towards it, so the pensioner ends up only getting charged 50%.

 

Evidently, the UK pays no such 50% subsidy to your Krankenkasse, so they are making a loss there.

 

source: https://www.toytowngermany.com/forum/topic/384690-doppelverbeitragung-von-betriebsrenten-or-exorbitant-healthcare-costs-for-retirees/?do=findComment&comment=3766051

On 03/08/2019, 18:39:16, PandaMunich said:

However, both these groups - mandatory and voluntary members of public health insurance - end up paying only half the public health insurance contribution on their German public pension, since DRV (Deutsche Rentenversicherung) gives them a subsidy of 50% of their public health insurance contribution, at the moment that's:

• subsidy = 50% * (14.6% + Zusatzbeitrag) * amount_your_DRV_pension

Well, for mandatory members of public health insurance, those 50% get transferred internally from DRV to the public health insurer, so the pensioner is only asked to pay the other 50% to the public health insurer.

For voluntary members, DRV pays out the subsidy (which you have to apply for with the DRV form R0820, the legal basis is §106 SGB VI) directly to the pensioner, so the public health insurer invoices the pensioner 100% of his public health insurance contribution.

Comes to the same result, the pensioner only pays 50% of his public health insurance contribution on his public pension out of his own pocket.

 

 

 

2 hours ago, Bogies said:

nd why 2.

§ 229 Versorgungsbezüge als beitragspflichtige Einnahmen. Military Pension.

The full Krankenversicherung is paid.

You always have to pay the "full" contribution, unless some institution out of the goodness of its heart pays half for you.

In Germany, military pensions are paid out by the state, which doesn't even subsidise its soldiers health insurance contributions while they are on serving, much less so when they are retired.

[Bogies 6]

Hello Forum, Panda, and all who helped me on this subject before. I'm back.
After all of your help earlier this year, many thanks, I filled out my tax return for 2022 and gave it to my Steuerberater in March.
I'd been in contact with the Krankenkasse, paid my back debts for the last four years, and now I pay monthly. Krankenversicherung 7,3 %. Zusatzbeitrag 0,75 % Pflegeversicherung 3,4 % on my UK. State Pension. On top, I pay:
Krankenversicherung 14,6 %. Zusatzbeitrag 1,5 % Pflegeversicherung 3.4 % on my Equinity, Forces Pension.
I informed my Steuerberater to fill out the Tax Return for 2022, and include my UK Pension for 2022, started in Feb 2022 and the Equinity Pension for 2022, started 02, 2016, and INFORM the F.A about not declaring the payments from 2016 onwards for the Equinity Pension.
Until yesterday, the Steuerberater hadn't lifted a finger on my tax return. So, pretty annoyed, I picked up my papers and wrote to the F.A explaining the situation, concerning the Equinity Pension, saying how sorry, and ignorant I was, promising to pay, back dues and interest, basically a "Selbstanzeige".
Here, I need your help again.

For the Uk State Pension I was paid €7.815. This I have declared in the Anlage AUS. Zeile 66. Großbrittanien, Department for Works and State Pensions, Einkunftsart §22 EStG

For the Forces Equinity Pension I was paid €2.121. This I have declared in the Anlage R- AUS. Zeile 5. Rentenbeitrag €2.121 Beginn der Rente Feb 2016.

Am I filling out the forms correctly ?

I remain truly thankful and indebted for all the help you can give me. Thankyou.

[PandaMunich 16,909]

>bogies wrote on 27.07.2023: Am I filling out the forms correctly ?
The place is correct for the UK State Pension, but the amount is too high, see below.
The UK Army Pension is in the absolutely wrong place, see below.

>bogies wrote on 05.01.2023: 5. British, Social Security Pension (National Insurance) since 2022 £151.65 / Week (£7.912,88 / Year) paid every four weeks into German Bank Account.
Please read this post: https://www.toytowngermany.com/forum/topic/390181-the-new-r-aus-for-the-esterkl%C3%A4rung/#comment-3952531

>bogies wrote on 05.01.2023: 
2. British Passport of course and German Citizenship since 2017. (I have both)
3. British Army Pension since 2016—£156 / Month. Payed into German Bank Account.
Up to the date in 2017 up to which you only had British citizenship, your Army Pension was taxable by the UK (you didn't pay any tax on it since the UK generously also give non-residents a tax-free allowance). During that period, it was only subject to Progressionsvorbehalt in Germany, i.e. it only raised your German tax rate only your other income.
This is laid down at the start of article 18 (2) of the double taxation agreement (DTA) between Germany and the UK: https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Themen/Steuern/Internationales_Steuerrecht/Staatenbezogene_Informationen/Laender_A_Z/Grossbritannien/2010-11-23-Grossbritannien-Abkommen-DBA-Gesetz.pdf?__blob=publicationFile&v=3

• "(2) Notwithstanding the provisions of paragraph 1, pensions and other similar remuneration paid by, or out of funds created by, a Contracting State, a “Land” or a political subdivision or a local authority of a “Land” or a Contracting State or some other legal entity under public law of that State to an individual in respect of services rendered to that State, “Land”, subdivision or authority or legal entity under public law shall be taxable only in that State"

--> it should appear in Anlage AUS, in the section "Nach DBA steuerfreie Einkünfte / Progressionsvorbehalt".

***************************************************************************

From the date you got German citizenship in 2017, this changed, from that date, your UK Army Pension was taxable by Germany, because of the end of article 18 (2) of the double taxation agreement (DTA):

• "However, such pensions and other similar remuneration shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State."
  

--> it should appear in Anlage N, line 6 and line 11, so in your Anlage N for 2022, you fill in 2121 € into both Anlage N, line 6 and Anlage N, line 11.

--> In Anlage N line 12, you have to fill in 12 * first monthly Army Pension you ever received, i.e. from that first month in 2016. I assumed it to be 12 *126.10 GBP (= 52/12 * weekly pension 29.10 GBP in first month you drew that pension), which assuming the exchange rate in that first month, which I had assumed to be May 2016, was 1€ = 0.77779 GBP, you look it up here, means that:
12*162.13 € = 1946 € (you round in your favour, in this case "up") have to be declared in Anlage N, line 12.

--> into Anlage N, line 13, you fill in the year in which you first received that UK Army Pension, which was: 2016

The Finanzamt will give you 2 special additional tax-free allowances on your UK Army Pension when calculating how much tax is due on it, just like German civil servants get on their pensions.
These 2 special additional tax-free allowances depend on the year you first received that UK Army Pension.
You can look them up in the table in § 19 (2) EStG, for 2016 as the first year you drew that UK Army Pension, you get: https://www.gesetze-im-internet.de/estg/__19.html
a) Versorgungsfreibetrag: 22.4% * 1946€ = 435.90€ = 436€ (it gets rounded in your favour)
b) Zuschlag zum Versorgungsfreibetrag: 504€

This means that of your 2,121€ UK Army Pension 2022, you will only end up taxing:
2,121 €
- 436 € Versorgungsfreibetrag
- 504 € Zuschlag zum Versorgungsfreibetrag
- 102 € Werbungskostenpauschbetrag Versorgungsbezug
1,079 € taxable

These 2 special additional tax-free allowances are set in stone, i.e. will be the same every year.
Every year, you will fill in 1946€ and 2016 into lines 12 and 13 of Anlage N and then the Finanzamt will reduce your UK Army Pension by 940 € (= 436 € + 504 €).
And of course by whatever the "Werbungskostenpauschbetrag Versorgungsbezug" will be that year, but don't get your hopes up, it has been 102 € for as far back as I can remember.

[Bogies 6]

Hello Panda,
Once again, a thousand thanks for your generous, professional and capable assistance.
I reckon, thanks to your guidance, that I am ready to send my tax declaration for 2022 to the F.A.
A very last question on the matter.  The force’s pension is declared on the Anlage N.  The WISO tax programme that I use, asks, of course, for an „Arbeitgeber“, „Berufsgruppe“ and "Tätigkeit“. As I’m declaring a military Pension here, my question would be: Can I leave those fields free, or am I required to fill out things like ‚Rentner‘ „Renten, versicherungsfreie Tätigkeit“, "Steuerklasse"
Again, many thanks. 

PPS. Payments, whether UK Army or UK Pension , although paid in £ , land on the bank account in €. Am I right in saying, from now on I only have to declare the € Euros that land on my bank account yearly, or do the Annual Rates from the UK, have to be converted. ?

[PandaMunich 16,909]

If your army pensions already lands in your account as €, then yes, use these real amounts.
But did they end up as € also back in 2016?
If not, use for calculating the 2016 monthly amount (which you multiply by 12) the official monthly average exchange rates.

You choose "Lohnsteuerbescheinigung" and Steuerklasse 0 (since no German wage tax had been deducted from it).
You are not a "Rentner" with regards to your UK Army Pension, but as someone drawing a government pension, you are a "Pensionär" (= retired Beamter).
You can fill in what you like for the Arbeitgeber, for example, I used "UK Army Pension":

[PandaMunich 16,909]

If your army pensions already lands in your account as €, then yes, use these real amounts.
But did they end up as € also back in 2016?
If not, use for calculating the 2016 monthly amount (which you multiply by 12) the official monthly average exchange rates.

You choose "Lohnsteuerbescheinigung" and Steuerklasse 0 (since no German wage tax had been deducted from it).
You are not a "Rentner" with regards to your UK Army Pension, but as someone drawing a government pension, you are a "Pensionär" (= retired Beamter).
You can fill in what you like for the Arbeitgeber, for example, I used "UK Army Pension":

[Bogies 6]

Thanks again for your swift reply. Since my 60 birthday was February 2016, the payments started in March, and because of the exchange rate, each month the payment into my account in € fluctuates. However, on my Advice of Payment 2016 the Annual Rate of £1688.96 was noted. So I reckon that I have to use this amount and use the official exchange rate of 0,77559 from Feb.2016. ?

[PandaMunich 16,909]

>bogies wrote: Since my 60 birthday was February 2016, the payments started in March, and because of the exchange rate, each month the payment into my account in € fluctuates. However, on my Advice of Payment 2016 the Annual Rate of £1688.96 was noted. So I reckon that I have to use this amount and use the official exchange rate of 0,77559 from Feb.2016?
No. 
The German law states in § 19 (2) sentence 4 EStG: https://dejure.org/gesetze/EStG/19.html

• 4Bemessungsgrundlage für den Versorgungsfreibetrag ist

  b)    bei Versorgungsbeginn ab 2005
  das Zwölffache des Versorgungsbezugs für den ersten vollen Monat

  
  

• 4The basis of assessment for the pension allowance shall be
  b) for pension commencement from 2005
  twelve times the pension for the first full month

--> if March 2016 was the first month in which you drew this pension for the the whole month, then you would have to fill into Anlage N, line 12:

12 * 52/12 * first_weekly_pension_March_2016_in_GBP / 0.78020 €/GBP

*******************************************************************

While you could use the actual € amounts you received in your German bank account, I think you would get a higher amount (you want a high amount, since 22.4% of this amount are your tax-free allowance "Versorgungsfreibetrag" in all perpetuity). And your bank will probably have a worse exchange rate than the above ECB exchange rate. But if you like, you can also calculate it like this:

12 * 52/12 * 1/4 *(1st weekly pension in March 2016 in € + 2nd weekly pension in March 2016 in € + 3rd weekly pension in March 2016 in € + 4th weekly pension in March 2016 in €)

[Bogies 6]

Hello Panda,
Thanks again for your competent, and generous help. I've sent the tax return for 2022 off to the F.A. and will have to wait now for their next move.
I worked out, using the WISO Steuer, back to 2016, that I should have paid between €150 and €250 a year more tax, for 2021, 2020, and so forth on my returns, so I don't reckon that they'll jump on me too much. I'll let you know how it goes, and their reply.
Many thanks.

[PandaMunich 16,909]

@Bogies
Thank you for the update.
I'm glad you managed to sort it out 😊

[kiplette 8,802]

Right, we are idiots, and have been trying not to end up asking Panda everything by using the combined wisdom of our local Brit expats (mostly old soldiers) and their pet tax advisor to sort our first tax return stuff.

Unfortunately this has gone horribly wrong right from the outset because even though we joined them in August NO-ONE from the group thought to tell us that the sodding thing needed done before the end of October. I am certain this info was out there, obvious to everyone else, but we definitely missed it. On top of that, the tax advisor is definitely wrong about important things eg. your UK mil/state/civil service pension gets taxed here regardless of citizenship.

Hey ho. It is what it is. Fines for late entry we will pay, such is life.

Am reading All the Threads to find out which line to put what on. Hopefully there will not therefore be too many rubbish questions.

Just first checking that the correct form is Unbeschränkt since we live here, regardless that the bulk of our income is not taxed in Germany?

[GaryC 411]

Yes, as a resident you are subject to unbeschränkte Steuerpflicht, i.e. taxable on your worldwide income. My understanding is that the UK income goes on Anlage AUS to feed into Progressionsvorbehalt but I cannot remember the line number...

[kiplette 8,802]

Thanks Gary.

I think it goes on Anlage AUS, line 36, going by one of the threads I read this afternoon (Panda's info, obviously 😀)

I thought the lump sum he got on leaving would also go there but then I saw in this thread, post 5

https://www.toytowngermany.com/forum/topic/367041-lump-sum-from-uk-pension/?page=1

that Panda suggests not doing that. In 2017. Things may have changed 😀

Zum Gluck we have a mate who is a year or two ahead of us on this journey with a lot of similar base-line data so hopefully a chat with him tonight will clear up a lot of our questions.

[PandaMunich 16,909]

>kiplette wrote: have been trying not to end up asking Panda everything
Next time, just write me an e-mail :-)
Remember, you will always be able to find me at: PandaMunich.de

>I think it goes on Anlage AUS, line 36, going by one of the threads I read this afternoon
The form Anlage AUS has in the meantime gotten longer, you can now find the section "Nach DBA steuerfreie Einkünfte / Progressionsvorbehalt" starting with line 66: https://www.finanzamt.bayern.de/Informationen/Formulare/fms.php?n=034010_22

>I thought the lump sum he got on leaving would also go there but then I saw in this thread, post 5
https://www.toytowngermany.com/forum/topic/367041-lump-sum-from-uk-pension/?page=1
that Panda suggests not doing that. In 2017. Things may have changed 😀
Yes, it also gets declared in the section "Nach DBA steuerfreie Einkünfte / Progressionsvorbehalt", i.e. Anlage AUS, starting with line 66: https://www.finanzamt.bayern.de/Informationen/Formulare/fms.php?n=034010_22
Just don't in parallel also declare it into Anlage N, that was what my 2017 post was about, since that would be an open invitation to the caseworker to tax it, instead of it just using it to raise your German income tax rate through Progressionsvorbehalt.

>NO-ONE thought to tell us that the sodding thing needed done before the end of October.

The filing deadline for the 2022 tax return: https://www-wiwo-de.translate.goog/finanzen/steuern-recht/steuererklaerung-frist-diese-abgabefristen-fuer-die-steuerjahre-2022-und-2023-gelten/27674424.html?_x_tr_sl=de&_x_tr_tl=en&_x_tr_hl=en-US&_x_tr_pto=wapp

• was 30. September 2023 for people who do it on their own tax return.
  
• is 31. July 2024 for people who have a Steuerberater/Lohnsteuerhilfeverein 
  

The filing deadline for the 2023 tax return is:

• 31. August 2024 if you do the tax return on your own
  
• 31. May 2025 if you have a Steuerberater/Lohnsteuerhilfeverein
  

If you end up owing extra tax because of the 2022 tax return, you will have to pay a late filing penalty of 25€ per month for every month you were late, i.e. starting with October 2023, this is laid down in § 152 AO (which they bothered to translate into English, the whole AO was translated): https://www.gesetze-im-internet.de/englisch_ao/englisch_ao.html#p1498

But there is a chance that you won't end up owing any extra tax, i.e. that you will not end up having to pay a late filing penalty.

The important thing is that you fill in an Anlage Kind for each of your children up to age 25 still in education/training, no matter where in the world that child lives.

You should have continued getting Kindergeld for your child who is in the Bundeswehr, i.e. who is still living in Germany (the child getting a salary from the Bundeswehr is irrelevant, just like the salary an Auszubildender gets, it is not considered enough to live on), see here (but what they say at the end of that Steuerring article, that the amount of Kindergeld that you were "entitled to" matters, hasn't been true for a few years, the only thing that matters is the amount of Kindergeld that you actually received, so if you didn't get any because forgot to apply, then 0€ Kindergeld will be considered, not the amount you would have gotten, if you had applied in time): https://www-steuerring-de.translate.goog/steuererklaerung-hilfe-news/news/kindergeld-fuer-soldaten.html?_x_tr_sl=de&_x_tr_tl=en&_x_tr_hl=en-US&_x_tr_pto=wapp
Unless your UK government service payout was extremely high, the Kindergeld for that child will still be more advantageous than the child tax allowance: https://www.toytowngermany.com/forum/topic/250901-child-tax-credit-breakdown/#comment-2713945
But you still have to fill in the Anlage Kind for that child: https://www.finanzamt.bayern.de/Informationen/Formulare/fms.php?n=034025_22

However, because of Brexit, you for sure haven't been getting Kindergeld for your children over 18 (but up to age 25) in education/training in the UK (you can only get Kindergeld for children who are living in the EU/EEA as laid down in § 62 (1) sentence 1 in conjunction with § 63 (1) sentence 6 EStG). 
Even though you are not entitled to Kindergeld for these children, you are still entitled to the child tax allowance (Kinderfreibetrag) for them. 
You get the child tax allowance for a child who is over 18 as long as that child is still busy getting a profession, it doesn't have to be university, any sort of vocational training (Berufsausbildung), even in foreign armed services, will also do, see § 32 (4) Nr. 2 EStG: https://www.gesetze-im-internet.de/estg/__32.html

Nowhere in § 32 EStG does it say that the Kinderfreibetrag is only for children who live in Germany or in the EU/EEA.
--> as long as the child is up to age 25 and is still in education/training anywhere worldwide, the parents living in Germany can get the Kinderfreibetrag for them in their German tax return, through filling in Anlage Kind (one for each child).

The Kinderfreibetrag for such a child up to age 25 living in the UK is the same amount as the one for a child living in Germany, since the UK is in country group 1: https://esth.bundesfinanzministerium.de/esth/2022/C-Anhaenge/Anhang-02/III/inhalt.html
--> your taxable income will get lowered by 8,548€ for each such child in your 2022 tax return: https://de.wikipedia.org/wiki/Kinderfreibetrag#H%C3%B6he_der_Kinderfreibetr%C3%A4ge
--> your taxable income being lowered by the Kinderfreibetrag counters the "bad" effect of Progressionsvorbehalt raising your income tax rate, so you may end up with a tax reimbursement and therefore no late filing penalty.

A note of caution:
The Finanzamt often plays dumb in such cases of children living in non-EU/EEA countries and assumes in the income tax Bescheid that you did get Kindergeld for that child, despite you having stated in Anlage Kind that you received 0€ Kindergeld for that child and despite income tax law clearly forbidding Kindergeld to be paid for children living outside the EU/EEA.
Ok, some children living outside the EU/EEA do get Kindergeld: children whose parents were sent to those countries by the German state, for example, because they are German diplomatic personnel or German military posted abroad, that's what the reference in §§ 62 and 63 EStG to § 1 (2) EStG is about, or children whose parents tax at least 90% of their income in Germany and had applied for unlimited tax liability in Germany under § 1 (3) EStG. And while we're at it, the children of parents posted by their German employer to a non-EU/EEA country and whose parents remain for in the German social security system are also entitled to Kindergeld, not through the EStG, but through § 1 (1) Nr. 1 BKKG.

The Finanzamt caseworker does state that they deviated from your tax return, but does so hidden in the "Erläuterungen zur Festsetzung" at the end of the Bescheid. They will also ask you in there to provide a certificate issued by the Familienkasse as proof that you hadn't received Kindergeld for that child (they assume the other reason for why someone hasn't received Kindergeld for a child: that the child is living in Germany and therefore entitled to Kindergeld, but that the parents had applied for Kindergeld too late, since Kindergeld is only paid out retroacatively for 6 months).
But many people don't read those Erläuterungen and don't even notice that the Finanzamt deviated from the tax return.

So you have to check page 2 of your income tax Bescheid (= result of your tax return, you get it from the Finanzamt after your tax return has been processed), just above the entry "zu versteuerndes Einkommen", to see whether the Kinderfreibetrag was really deducted: