National Insurance Class 3 contributions and German tax

[Nixon]

Thanks Panda, looks like my mind was not following the stuff.

It sounds crazy that just having them with no dividends being distributed/collected would trigger paying taxes on unrealized gain.
What would happen with people that have 401Ks and now live in Germany? They are not contributing to the plan, just have it sitting there, would they have to pay taxes on the rise of the value before they start getting money from it?

[PandaMunich]

It sounds crazy that just having them with no dividends being distributed/collected would trigger paying taxes on unrealized gain.
What would happen with people that have 401Ks and now live in Germany? They are not contributing to the plan, just have it sitting there, would they have to pay taxes on the rise of the value before they start getting money from it?

No, since US pension plans like 401k, IRA and Roth-IRA are privileged by article 18A (1) of the double taxation agreement between Germany and the USA, in that you only have to tax them when you withdraw from them: http://www.pinkernell.de/dbausa.htm#Art18A

• Article 18A
  Pension Plans
  
  1. Where an individual who is a resident of a Contracting State is a member or beneficiary of, or participant in, a pension plan established in the other Contracting State, income earned by the pension plan may be taxed as income of that individual only when, and, to the extent that, it is paid to, or for the benefit of, that individual from the pension plan (and not transferred to another pension plan in that other Contracting State).

[Nixon]

Thank you for clarifying it.

[NorthernLights]

I know you can claim NI Class 3 contributions for the UK pension in your German taxes but does this also apply for back payments for previous years?

For example I have already filed my tax form for this year in Germany however if I decide to make NI Class 3 contributions for 2020/2021, 2021/2022, and 2022/2023 later this year can I claim these back when completing my German taxes next year?

In the German tax return, things go by when you pay for them.
So if you pay for them in 2024, you will claim them in your German income tax return for 2024, in line 6 of Anlage Vorsorgeaufwand:
2024-08-01 14_42_58-aav_anlage_vorsorgeaufwand_2023.pdf - Adobe Acrobat Pro.jpg

I would like to include the voluntary contributions class 2 NI in my 2025 German Tax return. I found the equivalent section in Elster under Beiträge zur Altervorsorge under 6 "Beiträge zu gesetzlichen Rentenversicherungen – ohne Beiträge, die in Zeile 4 geltend gemacht werden".

So I will convert using the usual method, but I would like to ask if anyone has any advice about where I should write an explanation for the Finanzamt to read or if I should also attach the confirmation of payment letter from HMRC to the "Eintrag" that I will enter?

[warsteiner70]

I attached the letter from HMRC confirming the amount I had paid and the years I paid for and this was accepted by Finanzamt Köln without any problems.

If yours if refused or the Finanzamt question it then you can always add the explanation as an attachment.

[Eric7]

I paid a substantial chunk last April (approx. €12k) but haven't recieved a letter confirming payment yet.
The years paid do show up in my pension forecast but I have nothing official to pass on to the Finanzant.

Is this going to be a problem?

[GaryC]

You won't get a schedule of the NI paid unless you ask for one. We used the HMRC Digital Assistant (chat) to talk to the NI team (just keep typing "adviser" or "agent" to get past the bot) and ask for a letter detailing the payment(s). I can't remember how long it took to arrive.

[warsteiner70]

I paid a substantial chunk last April (approx. €12k) but haven't recieved a letter confirming payment yet.
The years paid do show up in my pension forecast but I have nothing official to pass on to the Finanzant.

Is this going to be a problem?

Do you have some documentation of the payment? I used Wise (previously Transferwise) to pay the money to HRMC from my German bank account and this has details of the payment going to HMRC along with the amount.

[Eric7]

You won't get a schedule of the NI paid unless you ask for one. We used the HMRC Digital Assistant (chat) to talk to the NI team (just keep typing "adviser" or "agent" to get past the bot) and ask for a letter detailing the payment(s). I can't remember how long it took to arrive.

Cheers, I'll try that!

[Eric7]

I paid a substantial chunk last April (approx. €12k) but haven't recieved a letter confirming payment yet.
The years paid do show up in my pension forecast but I have nothing official to pass on to the Finanzant.

Is this going to be a problem?

Do you have some documentation of the payment? I used Wise (previously Transferwise) to pay the money to HRMC from my German bank account and this has details of the payment going to HMRC along with the amount.

It was paid from my normal German bank account so I have the Kontoauszug.