Taxing States

[obrienic]

Am looking at moving back to Germany after a few years in the UK as a UK Tax Resident (dual citizen). Can anybody here confirm from experience if my understanding on which country taxes what is as follows:
Private Company Pension - UK (with DE progression)
UK House Rental income - UK (with DE progression)
Share Dividends income - DE
Savings Interest income - DE

[PandaMunich]

Am looking at moving back to Germany after a few years in the UK as a UK Tax Resident (dual citizen). Can anybody here confirm from experience if my understanding on which country taxes what is as follows:
Private Company Pension - UK (with DE progression)

The default is that private pensions get taxed in your country of residence, which will be Germany, see article 17 (1) of the double taxation agreement (DTA) between Germany and the UK: https://www.bundesfinanzministerium.de/ ... onFile&v=3

• Article 17
  Pensions, annuities and similar payments
  (1) Subject to the provisions of paragraph 2 of Article 18, pensions, other similar remuneration or annuities arising in a Contracting State and paid to a resident of the other Contracting State, shall be taxable only in that other State

Only if the contributions into that private pension plan had been paid out of untaxed or partly untaxed money for more than 15 years in the UK and if the UK then actually would tax the resulting pension, does article 17 (3) of the DTA take away the taxation rights on it from Germany again and assign them to the UK instead:

• (3) Notwithstanding the provisions of paragraph 1, such a
  pension, similar remuneration or annuity arising in a Contracting
  State which is attributable in whole or in part to contributions
  which, for more than 15 years in that State,
  
  a) did not form part of the taxable income from employment,
  or
  b) were tax-deductible,
  or
  c) were tax-relieved in some other way
  
  shall be taxable only in that State. This paragraph shall not
  apply if that State does not effectively tax the pension, other
  similar remuneration or annuity, or if the tax relief was clawed
  back for any reason, or if the 15 year condition is fulfilled in both
  Contracting States.

UK House Rental income - UK (with DE progression)
Share Dividends income - DE
Savings Interest income - DE

Correct.

Please note that your UK rental profit has to be calculated according to German tax rules, because of H 32b "Ausländische Einkünfte" Satz 1 EStH: https://esth.bundesfinanzministerium.de ... nhalt.html

Which isn't that bad (well, except for the extra work necessary for also having to calculate the German way), since in Germany you also have depreciation as a rental expense, see here: viewtopic.php?t=23

[Nixon]

Regarding depreciation, now I am drifting away, the only downside of the German way is the 50 years of stretch.
Except if property is built after 1.1.2023. Just found out about this.
https://taxsummaries.pwc.com/germany/co ... deductions

[PandaMunich]

Regarding depreciation, now I am drifting away, the only downside of the German way is the 50 years of stretch.

Still better than the UK way, which doesn't allow any depreciation: https://www.ingletonpartners.com/insigh ... deduction/

[Auntie Helen]

Regarding depreciation, now I am drifting away, the only downside of the German way is the 50 years of stretch.

Still better than the UK way, which doesn't allow any depreciation: https://www.ingletonpartners.com/insigh ... deduction/

I guess that’s because British houses mostly appreciate rather than depreciate (except for in a few particular years in recent history).

My former husband and I bought a house in Tonbridge in Kent for 109k in 1997ish. Ten years later we sold it for 440k, having spent 40k on an extension. Crazy numbers!

[Nixon]

Ha, I didn't know that. Another reason not to move overthere

Right, I was comparing to the States, as usually.
But it is good to know that Germany is changing towards it too.

[obrienic]

Thanks Panda Munich. I believe my private company pension will actually be taxed in the UK as I did contribute for more than 15 years and it meets the other requirements listed.

[GaryC]

Regarding depreciation, now I am drifting away, the only downside of the German way is the 50 years of stretch.

Still better than the UK way, which doesn't allow any depreciation: https://www.ingletonpartners.com/insigh ... deduction/

I guess that’s because British houses mostly appreciate rather than depreciate (except for in a few particular years in recent history).

My former husband and I bought a house in Tonbridge in Kent for 109k in 1997ish. Ten years later we sold it for 440k, having spent 40k on an extension. Crazy numbers!

Not really. The UK tax system doesn't allow capital expenses in the calculation of your income, so depreciation of a capital asset is simply not allowable for income tax on first principles. One might qualify for Capital Allowances for cars, tools, etc but that is set down in its own legislation...