Ex-UK military with pension beware on Brexit if now German citizen

[Theogrin 2]

I am ex. British military in receipt of a pension, but self-employed as an English Trainer. At the start of this year, I obtained my German citizenship like many other Brits have done.

However, after submitting my annual tax return and waiting a long time for the result, I have just received a letter from the local tax office pointing out a particular rule in the double taxation agreement between the UK and Germany (Article 18 - Government service, paragraph 2). Unfortunately, this clearly states that if you are both resident in Germany and also a citizen of Germany, state/government pensions are taxable in Germany.

Unfortunately, the double taxation agreement is not an EU agreement and so will probably not change during Brexit.

The implications for me as self-employed, are that not only will I loss out of the UK personal tax free allowance on my pension, but I will also have to pay 15.5% of it to the health insurance. Potentially losing about 30% of the pension!

Didn't really count on that when I applied for German Citizenship; it thought it was going to help make life easier!

 

So, unless anyone has any better ideas, I'm now seriously considering handing back the German citizenship and just applying for 'Permission for permanent residence' after Brexit.

 

[PandaMunich 16,570]

2 hours ago, Theogrin said:

However, after submitting my annual tax return and waiting a long time for the result, I have just received a letter from the local tax office pointing out a particular rule in the double taxation agreement between the UK and Germany (Article 18 - Government service, paragraph 2). Unfortunately, this clearly states that if you are both resident in Germany and also a citizen of Germany, state/government pensions are taxable in Germany.

Unfortunately, the double taxation agreement is not an EU agreement and so will probably not change during Brexit.The implications for me as self-employed, are that not only will I loss out of the UK personal tax free allowance on my pension,

 

Correct, I already wrote about that:

• " However, from the time you take on German citizenship, your civil service pension becomes taxable by Germany, because of the last sentence in article 18 (2)! "

 

By the way, you did remember to declare your UK pension in your previous German tax returns, didn't you?

As long as you only had UK citizenship, it was progression income (fällt unter Progressionsvorbehalt), i.e. it wouldn't have been taxed again, but it still would have raised your German tax rate on your other income, i.e. on the income for which Germany did have the taxation rights.

This is laid down in article 23 (1) d) of the double taxation agreement between Germany and the UK:

 

 

 

2 hours ago, Theogrin said:

, but I will also have to pay 15.5% of it to the health insurance.

 

You always had to do that, nothing changed for you.

And be prepared for backcharging as soon as your German public health insurance finds that you had a UK pension that you didn't declare in the questionnaire that they send you every year.

 

As a self-employed person, you have voluntary membership in German public health insurance. 

German public health insurance charges their contributions on your worldwide income for voluntary members, no matter whether it's income that's taxable by Germany or not:  https://www.gkv-spitzenverband.de/media/dokumente/krankenversicherung_1/grundprinzipien_1/finanzierung/beitragsbemessung/2018-11-20_Katalog_Beitragseinnahmen.pdf

 

 

2 hours ago, Theogrin said:

self-employed as an English Trainer

 

Ummh, you do know that as a teacher, you're a mandatory member of German public pension insurance (= DRV = Deutsche Rentenversicherung), i.e. you have to give them 18.6% (that's the 2019 rate) of your teaching profit?

This is a rule that applies to everybody, no matter what their nationality.

 

And that DRV can backcharge you for the last 4.x years?

Just checking.

[White Rose of Yorkshire 1,088]

I find it strange that you applied for German citizenship because you thought it would make life easier not out of love for Germany and the German way of life.

 

 

[Sir Percy B 1,309]

 

7 hours ago, White Rose of Yorkshire said:

not out of love for Germany and the German way of life

 

[nina_glyndwr 4,748]

If you receive a UK pension and are living in Germany, you should be able to have your health care costs assumed by the UK.

 

You have a small window of time to jump from private health insurance to the AOK when you get to pensionable age. Not sure what that age is at the moment, but a friend of mine who gets about 80% of a UK pension... he is now 80. When he was 60 he was told he could contact the AOK and they would assume his health care costs. He no longer had to pay for private health insurance. He's not seen a bill since. 

 

Now.. if the UK crashes out of the EU.. there are going to be an awful lot of UK pensioners in the EU who are going to have to find alternative arrangements. They may have to return to the UK - especially since their income has dropped on account of the terrible exchange rate.

[nina_glyndwr 4,748]

These kinds of rules and regulations are why I pay for an accountant to do all my stuff. I also have to charge VAT. And then I occasionally have a translation customer outside Germany. Too many rules.

 

One little tip, though... You should look into teaching at the local VHS. You can earn up to EUR 2,400 a year tax free. It used to be the rule that if you earned a cent above that threshold, you would be taxed on all of that income. In the last couple of years, however, the wording has changed and now only what is earned above the EUR 2,400 limit is taxed at 25%. I got this in writing and rang up to confirm this as I want to offer a third course at the VHS as of next year.

 

Oh, and what you earn above that limit... you can offset anything you buy to carry out those courses to reduce the taxable amount. Me.. I only buy a few new marker pens every year.

[keith2011 2,573]

1 hour ago, nina_glyndwr said:

If you receive a UK pension and are living in Germany, you should be able to have your health care costs assumed by the UK.

 

 

That is only true if the pensioner moved to Germany after retiring in the UK! If you worked in both countries and retired in Germany you have to continue paying your German health insurance.

[Theogrin 2]

Many thanks for the detailed reply PandaMunich, and yes, I was aware of all the points you brought up and I have been declaring my pension and having the 'Progressionsverbehalt' applied.

Oh, by the way, re. the automatic enrollment into the German state pension as a teacher, there is a get out clause because I am in receipt of a state funded pension already!

(...Ebenso sind Sie versicherungsfrei, wenn Sie eine entsprechende Altersversorgung nach beamten- beziehengsweise soldatenrechtlichen Vorschriften, nach kirchenrechtlichen Regelung oder von einer berufsständischen Versorgungseinrichtung erhalten.)

 

As for the other advice about claiming the reciprocal arrangement for health insurance, I'm still quite a long way from that age.

 

The way I see it now, I'm going to rescind my German citizenship and post Brexit, apply for permanent residence. Apparently all the info coming out of the German ministry, seems to say that anyone currently living in Germany will be granted it. My UK  civil service pension will then return to being taxed at source in the UK. 

[PandaMunich 16,570]

They are talking about the Altersversorgung, i.e. an old-age pension, for which you would have to be over 65.

Which you aren't.

 

Read §5 (4) Nr. 2 SGB VI: https://www.gesetze-im-internet.de/sgb_6/__5.html

• (4) Versicherungsfrei sind Personen, die 
  ...
  2. nach beamtenrechtlichen Vorschriften oder Grundsätzen oder entsprechenden kirchenrechtlichen Regelungen oder nach den Regelungen einer berufsständischen Versorgungseinrichtung eine Versorgung nach Erreichen einer Altersgrenze beziehen oder die in der Gemeinschaft übliche Versorgung im Alter nach Absatz 1 Satz 1 Nr. 3 erhalten oder

[Theogrin 2]

15 minutes ago, PandaMunich said:

They are talking about the Altersversorgung, i.e. an old-age pension, for which you would have to be over 65.

Which you aren't.

 

Read §5 (4) Nr. 2 SGB VI: https://www.gesetze-im-internet.de/sgb_6/__5.html

• (4) Versicherungsfrei sind Personen, die 
  ...
  2. nach beamtenrechtlichen Vorschriften oder Grundsätzen oder entsprechenden kirchenrechtlichen Regelungen oder nach den Regelungen einer berufsständischen Versorgungseinrichtung eine Versorgung nach Erreichen einer Altersgrenze beziehen oder die in der Gemeinschaft übliche Versorgung im Alter nach Absatz 1 Satz 1 Nr. 3 erhalten oder

 

Am I reading this wrong, or does this not apply as I was a professional soldier (Berufssoldaten)? :

 

(1) Versicherungsfrei sind

1.

Beamte und Richter auf Lebenszeit, auf Zeit oder auf Probe, Berufssoldaten und Soldaten auf Zeit sowie Beamte auf Widerruf im Vorbereitungsdienst,

 

.....

in dieser Beschäftigung und in weiteren Beschäftigungen, auf die die Gewährleistung einer Versorgungsanwartschaft erstreckt wird. Für Personen nach Satz 1 Nr. 2 gilt dies nur, wenn sie

1.

nach beamtenrechtlichen Vorschriften oder Grundsätzen Anspruch auf Vergütung und bei Krankheit auf Fortzahlung der Bezüge haben oder

[RedMidge 6,638]

8 minutes ago, Theogrin said:

 

Am I reading this wrong, or does this not apply as I was a professional soldier (Berufssoldaten)? :

 

(1) Versicherungsfrei sind

1.

Beamte und Richter auf Lebenszeit, auf Zeit oder auf Probe, Berufssoldaten und Soldaten auf Zeit sowie Beamte auf Widerruf im Vorbereitungsdienst,

 

....

in dieser Beschäftigung und in weiteren Beschäftigungen, auf die die Gewährleistung einer Versorgungsanwartschaft erstreckt wird. Für Personen nach Satz 1 Nr. 2 gilt dies nur, wenn sie

1.

nach beamtenrechtlichen Vorschriften oder Grundsätzen Anspruch auf Vergütung und bei Krankheit auf Fortzahlung der Bezüge haben oder

Soldier with British or German army?

[PandaMunich 16,570]

That's for people who are at the moment soldiers in the German military.

You are a former soldier, who was in the UK military.

[Theogrin 2]

Hi all,

 

Serious question before I jump into the next rash decision:

 

Given that my new German citizenship is going to bring an additional €4000+ annual bill with it, is there any good reason I shouldn't just rescind it and apply for permanent residence once Brexit has happened?

 

Thanks

[pappnase 2,571]

If you want to live or work in another EU country later on in life then having a German passport may be helpful.

If you want to get it back after you rescind it might well not be so easy next time, and you almost certainly won't get to keep both.

 

I don't know anything about the tax or other implications.

[nina_glyndwr 4,748]

On 23/09/2019, 09:54:43, keith2011 said:

 

That is only true if the pensioner moved to Germany after retiring in the UK! If you worked in both countries and retired in Germany you have to continue paying your German health insurance.

This is not the case with my 80-year-old friend from Krefeld. He came over here with the army, left the army because he fell in love with a German woman, sold cars until retirement and had been paying private health insurance in Germany. 

[PandaMunich 16,570]

@nina_glyndwr

 is right, 

@keith2011

isn't.

 

Any UK old-age public pensioner who doesn't also get a old-age German public pension can - as long as the UK is still in the EU, i.e. until Brexit happens - apply for the form S1 at the NHS, present it to any German public health insurer and get free German public health insurance (the NHS will pick up the tab in the background).

 

For details, please see the section "UK pensioners" on the NHS website: https://www.nhs.uk/using-the-nhs/healthcare-abroad/moving-abroad/planning-your-healthcare/

[Theogrin 2]

On 9/25/2019, 5:13:15, pappnase said:

If you want to live or work in another EU country later on in life then having a German passport may be helpful.

If you want to get it back after you rescind it might well not be so easy next time, and you almost certainly won't get to keep both.

 

I don't know anything about the tax or other implications.

Ah yes, good point about being able to still move about in the rest of Europe.

 

Still, the list of benefits isn't particularly long at the moment. 

[keith2011 2,573]

7 hours ago, PandaMunich said:

@nina_glyndwr

 is right, 

@keith2011

isn't.

 

Any UK old-age public pensioner who doesn't also get a old-age German public pension can - as long as the UK is still in the EU, i.e. until Brexit happens - apply for the form S1 at the NHS, present it to any German public health insurer and get free German public health insurance (the NHS will pick up the tab in the background).

 

For details, please see the section "UK pensioners" on the NHS website: https://www.nhs.uk/using-the-nhs/healthcare-abroad/moving-abroad/planning-your-healthcare/

 

Thanks for the correction, that is very interesting. Had I known that earlier I could have not contributed voluntarily to the German state pension and saved the contributions elsewhere, given that the payout only just covers the cost of my health insurance. Hmm of course the impact of Brexit may well  be much worse in that situation if S1s get withdrawn.

[White Rose of Yorkshire 1,088]

Well we now have 33 days to Brexit.

 

According to the latest Goverment info:   

 

If there’s no deal, UK nationals will not need visas for short stays elsewhere in the EU. You will be able to stay up to 90 days in another EU, EEA or EFTA country, within a 180 day period. You must retain evidence of travel (e.g. train and plane tickets), in case these are requested by national authorities. If you hold a residence permit from an EU, EEA or EFTA country, you will be able to transit through other EU, EEA or EFTA countries to reach your country of residence.

 

If there’s no deal, the German government has said that you should allow plenty of time when re-entering Germany and make sure that have you have documentation to hand that proves that you are a long-term resident, such as your residence permit, Meldebescheinigung, correspondence concerning social insurance contributions and work or rental contracts.

 

https://www.gov.uk/guidance/living-in-germany?utm_source=c7f67bf7-7bfb-47c4-866f-452ebcd83544&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

 

 

 

[nina_glyndwr 4,748]

20 hours ago, PandaMunich said:

@nina_glyndwr

 is right, 

@keith2011

isn't.

 

Any UK old-age public pensioner who doesn't also get a old-age German public pension can - as long as the UK is still in the EU, i.e. until Brexit happens - apply for the form S1 at the NHS, present it to any German public health insurer and get free German public health insurance (the NHS will pick up the tab in the background).

 

For details, please see the section "UK pensioners" on the NHS website: https://www.nhs.uk/using-the-nhs/healthcare-abroad/moving-abroad/planning-your-healthcare/

Hello Panda,

 

I have also found this source of information:

https://www.nhs.uk/using-the-nhs/healthcare-abroad/healthcare-when-travelling-abroad/healthcare-in-germany/

 

Especially this bit:

Living in Germany

S1 certificate

You may be entitled to state healthcare paid for by the UK if you live in Germany and receive:

• an exportable UK State Pension
• a contribution-based Employment Support Allowance
• another exportable benefit

You will need to apply for a certificate of entitlement known as an S1 form.

An S1 certificate helps you and your dependants access healthcare in Germany. If you have an S1 certificate, it will be valid until the UK leaves the EU.

You may be eligible for an S1 certificate if you:

• receive certain UK benefits, such as a UK State Pension
• are employed by a UK body or firm (you are a posted or frontier worker)
• are a dependant of someone who has an S1 certificate

You can apply for an S1 certificate through the Business Services Authority.

If you receive a UK State Pension, you can apply for your certificate via the Overseas Healthcare Service on +44 (0) 191 218 1999 (option 5).

Your S1 certificate may not be valid after exit day if there is a no-deal Brexit. This will depend on whether the UK has an arrangement with Germany and might mean you need to pay in full for treatment.

If you do not have an S1 certificate, you can continue to apply for one until the UK leaves the EU. It is important to have all the right documentation and that it is up to date.