General information for all recipients of a German pension
On Januar 1, 2005 a new law on taxation of old age pensions (Alterseinkünftegesetz) entered into force. According to this law, pension from the statutory pension insurance (and other forms of pensions) shall be gradually carried over to full taxation. This process will stretch from 2005 until 2040. Depending on the year of the first pension commencement, the tax and revenue office determines the so-called taxation rate of the pension and the fixed tax exempt amount. The taxation rate identifies the taxable percentage of your pension.
In case of a pension commencement in 2005 or before the tax office determines a fixed tax-exempt amount considering a taxation rate of 50 %. The tax-exempt amount is in principle accounted for every year and during the whole retention of the pension payment.
For every new pensioner age group from 2006 onwards the taxation rate rises by two percentage points, and for every pensioner age group from 2021 it rises by one percentage point. Thus, the tax-exempt amount resulting from this declines gradually for every new pensioner age group. For pensioner age groups from the year 2040 100 % of the pension form the statutory pension insurance will be subject to taxation.
Additional information for recipients of a German pension in Canada
These regulations apply for pensioners residing outside of Germany, too. This results in a limited tax liability (§ 49 Abs. 1 Nr. 7 Einkommenssteuergesetz). Persons who receive old age pensions from Germany and reside in Canada are therefore obliged to submit a tax declaration in Germany. Tax declaration forms can be downloaded from the link at the bottom of this page or forwarded by the local tax authority (Finanzamt) Neubrandenburg upon request. So far, tax declaration forms are in German only.
Special regulations for recipients of a pension paid for employment in a ghetto
For more information on special regulations regarding the taxation of social security pensions paid by German statutory pension insurance scheme on the basis of contribution periods for employment in a ghetto, please click here
Who to contact with further questions
If you have further questions regarding taxation of your pension in Germany, you have the option to either contact the competent tax authority in Germany or a tax accountant with knowledge in international taxation regulations. Due to the complexity of this matter, the German Consulate is not in a position to offer further information or counselling.
The Finanzamt Neubrandenburg (tax office specialized for pensions paid to pensioners living abroad) can be reached as follows:
Postfach 11 01 64
17041 Neubrandenburg, Germany
telephone: 01149-395-44222 47000
fax: 01149-395-380 1059
The English language website of this tax office is:
www.finanzamt-rente-im-ausland.de/en/ (contains very helpful FAQ section)
English speaking tax consultants and search services
Below find a list of English speaking tax consultants. Please note that this list is not a recommendation nor guaranteed to be complete.
Canadian German Agreement on Double Taxation
The Agreement on Double Taxation between Germany and Canada provides that benefits under the social security legislation of one country that are paid to a resident of the other country, may be taxed in the country of residence. However, the benefits can only be taxed to the extent they would have been taxable if the individual was resident in the first country. This means that the same amount of social security pension payments that would have been included in income if the individual had been a resident of Germany will be included in income in Canada. Taxes paid in Germany are credited against taxes in Canada in order to avoid double Taxation.
More information and links on the taxation of German social security pensions:
https://www.formulare-bfinv.de/ (download of tax declaration forms – in German only)
Website of Canada Revenue Agency:
http://www.cra-arc.gc.ca/tx/nnrsdnts/ntcs/grmny2005-eng.html (information from Revenue Canada Agency with regards to taxation of German pensions as of 2005)
http://www.cra-arc.gc.ca/tx/nnrsdnts/ntcs/grmny-eng.html (information from Revenue Canada Agency with regards to taxation of German pensions in 2003 and 2004)
Website of German Federal Ministry of Finance:
German Federal Chamber of tax accountants (in German only)
The following list is an incomplete listing of English speaking tax consultants and search services.
Below we provide an incomplete list of pension consultants in the Canadian provinces.
Please note that this is not a recommendation. Please also note that typically pension consultants will charge a fee for their services.