Information on taxation of German old age pensions
Since 2005, pensioners living abroad who draw retirement income from Germany within the meaning of § 22, No. 1 Sentence 3a of the German Income Tax Act have generally been subject to limited income tax liability (§ 49, Sec. 1, No. 7 of the German Income Tax Act). As of 2009, certain retirement income drawn from Germany within the meaning of § 22, No. 5, Sentence 1 of the German Income Tax Act (§ 49, Sec. 1, No. 10 of the German Income Tax Act) is also subject to limited income tax liability. Whether this income is in fact taxed in Germany, however, depends on whether the provisions of the bilateral double-taxation Agreement provides for taxation by Germany as source state.
Since 2008, the double-taxation Agreement with the U.S. no longer provides for taxation in the source state. Consequently, the pensioner’s country of residence has had the exclusive right of taxation since 2008. Therefore, as of the 2008 assessment period, it is no longer necessary for persons living in the U.S. who exclusively draw retirement income from Germany within the meaning of § 22, No. 1, Sentence 3a of the German Income Tax Act or § 22, No. 5, Sentence 1 of the German Income Tax Act (in particular pensions paid out of the German Pension Insurance) to file a tax return in Germany (starting in 2009). It must be pointed out, however, that, although the Finance Office is currently forgoing the filing of tax returns, it is generally entitled to require the filing. If a taxpayer receives such a request, he or she is obligated to submit a tax return.
For questions please contact (please enclose the letter you received on your pension, a passport copy and your green card)
Neustrelitzer Str. 120
Tel.: 01149 395 44222 47000