How are pension payments treated in cases of double taxation?
April 28, 2022 | 120,00 EUR | answered by Albrecht Schneider
Dear tax consultant,
my name is Laura Heck and I am currently dealing with the issue of double taxation in relation to pension payments. I have been receiving a pension for several years and have noticed that it is being taxed in both my country of residence and the country where I worked. This results in a double taxation of my pension payments, which concerns me.
I am wondering how pension payments are treated in cases of double taxation and if there are ways to avoid or at least reduce it. Are there any specific regulations or agreements between countries that can prevent the double taxation of pension payments? What steps can I take to optimize my tax situation and minimize the double taxation?
I would greatly appreciate your expertise and advice on this matter, as I would like to understand how to fulfill my tax obligations in relation to my pension payments correctly, without being unnecessarily double taxed.
Thank you in advance for your support.
Sincerely,
Laura Heck
Dear Mrs. Heck,
Thank you for your inquiry regarding the double taxation of pension payments. This is indeed a complex issue that affects many retirees who have worked in different countries and now receive pensions from various sources.
Double taxation of pension payments occurs when both the country of residence and the country where the pension income was earned have the right to tax the pension payments. This can lead to a significant tax burden and pose a challenge for retirees.
To avoid or at least minimize double taxation of pension payments, there are various measures you can take. Firstly, there are double taxation agreements between many countries that determine which country has the taxing rights for certain income. These agreements are intended to prevent income such as pension payments from being taxed in both countries.
It is important to check whether there is such an agreement between your country of residence and the country from which you receive the pension, and how it applies to pension payments. In some cases, you may be able to obtain a certificate of residence in one of the countries to ensure that only that country taxes your pension payments.
Furthermore, it may be advisable to declare and tax the pension payments in your country of residence to avoid double taxation. In many cases, you can also claim certain expenses or deductions to reduce your tax burden.
It is recommended to consult an experienced tax advisor who is familiar with international tax matters and can help you optimize your tax situation and minimize the double taxation of pension payments.
I hope this information is helpful to you and supports you in your tax planning. If you have any further questions, please feel free to contact me.
Sincerely,
Albrecht Schneider
Tax Advisor
