National Insurance Class 3 contributions and German tax

[skadi]

You need to call HMRC and tell them which years you want to make the payments for. They will then make a note on your file so it gets correctly assigned once you have transferred the money.

[GaryC]

If you consider that you meet the statutory requirements for paying at Class 2 abroad then you should write to HMRC and ask them to reconsider their decision (essentially an appeal). You would write to the address on the NI general contact page.

The law is https://www.legislation.gov.uk/uksi/200 ... lation/147 - see paragraph (1).

The first requirement is that "immediately before he last left Great Britain or Northern Ireland (as the case may be), he was ordinarily an employed earner or a self-employed earner". "Ordinarily" takes it normal meaning of "normally" and HMRC look for patterns in your working history. If you were unemployed and seeking work that can count but if you were simply not working then you would not qualify.

Meeting that requirement "opens" the door to pay Class 2 if the second requirement is met. That is that throughout any contribution week you wish to pay at Class 2, "he is gainfully employed outside the United Kingdom", i.e. employed or self-employed abroad.

You need to view the above on a week-by-week basis, so can end up with a whole year at Class 2, 3, or a mix of both for a year.

Whatever the outcome of the above, you need to check with DWP (but I can give you a heads up) whether all of the years HMRC tells you are available, will actually increase your pension. All years 2016/17 and later will (until you get capped at the maximum) but years 2015/16 and earlier cause your 2016 starting amount for the new rules to be re-calculated and can add £0, £5.65 or £6.32 per week. You need to send a call back request to DWP to arrange a discussion about this because they are too busy to answer the phones. That form extends the deadline for you and you will be called back after 5 April - about 8 weeks. https://www.gov.uk/future-pension-centre

Once you have sorted the above you pay using the reference format you you mention and the account details on the link you posted. A few weeks after that you will need to contact HMRC (online chat will be best) to tell them which years to allocate your payment against.

[Eric7]

If you consider that you meet the statutory requirements for paying at Class 2 abroad then you should write to HMRC and ask them to reconsider their decision (essentially an appeal). You would write to the address on the NI general contact page.

The law is https://www.legislation.gov.uk/uksi/200 ... lation/147 - see paragraph (1).

The first requirement is that "immediately before he last left Great Britain or Northern Ireland (as the case may be), he was ordinarily an employed earner or a self-employed earner". "Ordinarily" takes it normal meaning of "normally" and HMRC look for patterns in your working history. If you were unemployed and seeking work that can count but if you were simply not working then you would not qualify.

Meeting that requirement "opens" the door to pay Class 2 if the second requirement is met. That is that throughout any contribution week you wish to pay at Class 2, "he is gainfully employed outside the United Kingdom", i.e. employed or self-employed abroad.

You need to view the above on a week-by-week basis, so can end up with a whole year at Class 2, 3, or a mix of both for a year.

Whatever the outcome of the above, you need to check with DWP (but I can give you a heads up) whether all of the years HMRC tells you are available, will actually increase your pension. All years 2016/17 and later will (until you get capped at the maximum) but years 2015/16 and earlier cause your 2016 starting amount for the new rules to be re-calculated and can add £0, £5.65 or £6.32 per week. You need to send a call back request to DWP to arrange a discussion about this because they are too busy to answer the phones. That form extends the deadline for you and you will be called back after 5 April - about 8 weeks. https://www.gov.uk/future-pension-centre

Once you have sorted the above you pay using the reference format you you mention and the account details on the link you posted. A few weeks after that you will need to contact HMRC (online chat will be best) to tell them which years to allocate your payment against.

Thanks for that!
I currently only have 3 years of contributions so assumed that any years I pay (also from before 2015/16) would increase my pension - is this not the case then? I've sent a callback request to DWP but appreciate any information you could give me!

Regarding class 2/3 - I was actually a student (working part time on and off) directly before I left the UK. I guess that means class 2 is not possible.

[GaryC]

With only 3 years then yes, you can simply pay any and all years on offer and as you say, it will be Class 3 as you were not working before you left the UK but your CF83 reply will tell you that

[Eric7]

With only 3 years then yes, you can simply pay any and all years on offer and as you say, it will be Class 3 as you were not working before you left the UK but your CF83 reply will tell you that

Thanks.

[Eric7]

Someone just said on a different forum that "Post-Brexit the Germans no longer accept contributions to the UK state system for deduction of tax, sadly. I just lost a fight with Finanzamt over this".

I suggested that is not correct and that Brexit has not changed anything in that regard. I assume that is correct?

Yes, you're right, since it doesn't say EU in Randziffer 4 of the BMF-Schreiben "Einkommensteuerrechtliche Behandlung von Vorsorgeaufwendungen": https://esth.bundesfinanzministerium.de ... nhalt.html

• 4
  Zu den Beiträgen nach § 10 Absatz 1 Nummer 2 Satz 1 Buchstabe a EStG gehören auch Beiträge an ausländische gesetzliche Rentenversicherungsträger (vgl. BFH vom 24. Juni 2009, BStBl II 2009, S. 1000); die inländischen Beitragsbemessungsgrenzen zur gesetzlichen RV sind insoweit nicht maßgebend.

• Contributions in accordance with § 10 para. 1 no. 2 sentence 1 letter a EStG also include contributions to foreign statutory pension insurance institutions (see BFH of 24 June 2009, BStBl II 2009, p. 1000); the domestic contribution assessment limits for statutory pension insurance are not relevant in this respect.

My accountant has told me that it probably won't be accepted because the UK is neither an EU country nor an EWR-Staat.

UK-Pension.jpg (45.66 KiB) Viewed 17939 times

I'm struggling to actually find this written in law though.

[Eric7]

Another question here....

On the nice letter I received from HMRC listing the years I can pay for, there are 2 payment dates listed for each year:
1. Payment date without penalty
2. Final time limit

The payment without penalty date for all years except the last one (2023-2024) is 5th of April 2025.
I would prefer to not pay everything right now if possible & the final time limits for the last 5 years on the list are 5th of April 2026, 2027, 2028 etc.

My question is: If I choose to delay those 5 years until just before the final time limits, what penalties am I looking at?

Cheers!

[PandaMunich]

Someone just said on a different forum that "Post-Brexit the Germans no longer accept contributions to the UK state system for deduction of tax, sadly. I just lost a fight with Finanzamt over this".

I suggested that is not correct and that Brexit has not changed anything in that regard. I assume that is correct?

Yes, you're right, since it doesn't say EU in Randziffer 4 of the BMF-Schreiben "Einkommensteuerrechtliche Behandlung von Vorsorgeaufwendungen": https://esth.bundesfinanzministerium.de ... nhalt.html

• 4
  Zu den Beiträgen nach § 10 Absatz 1 Nummer 2 Satz 1 Buchstabe a EStG gehören auch Beiträge an ausländische gesetzliche Rentenversicherungsträger (vgl. BFH vom 24. Juni 2009, BStBl II 2009, S. 1000); die inländischen Beitragsbemessungsgrenzen zur gesetzlichen RV sind insoweit nicht maßgebend.

• Contributions in accordance with § 10 para. 1 no. 2 sentence 1 letter a EStG also include contributions to foreign statutory pension insurance institutions (see BFH of 24 June 2009, BStBl II 2009, p. 1000); the domestic contribution assessment limits for statutory pension insurance are not relevant in this respect.

My accountant has told me that it probably won't be accepted because the UK is neither an EU country nor an EWR-Staat.

UK-Pension.jpg (45.66 KiB) Viewed 17589 times

I'm struggling to actually find this written in law though.

Please ask your accountant to read on in § 10 (2) Nr. 2 EStG and he will find: https://dejure.org/gesetze/EStG/10.html

• (2)
  1The deduction of the amounts specified in paragraph 1 numbers 2, 3 and 3a (pension expenses) is subject to the condition that they
  ...
  2. are paid to
  
  a) 1Insurance companies,
  aa) which have their registered office or place of management in a Member State of the European Union or a signatory state to the Agreement on the European Economic Area and are authorised to conduct insurance business in Germany, or
  bb) which are authorised to conduct business in Germany.
  2In addition, contributions are only taken into account if they are amounts within the meaning of paragraph 1 number 3 sentence 1 letter a to an institution that provides other cover in the event of illness within the meaning of Section 5 paragraph 1 number 13 of the Fifth Book of the German Social Security Code or cover comparable to aid or free military welfare within the meaning of Section 193 paragraph 3 sentence 2 number 2 of the German Insurance Contract Act.3 This applies mutatis mutandis if a taxpayer who is neither domiciled nor ordinarily resident in Germany acquires insurance cover within the meaning of paragraph 1 number 3 sentence 1 with the contributions,
  
  b) occupational pension schemes,
  
  c) a social security institution <-- this is the relevant part
  
  d) a provider within the meaning of § 80.

[Eric7]

Yes, you're right, since it doesn't say EU in Randziffer 4 of the BMF-Schreiben "Einkommensteuerrechtliche Behandlung von Vorsorgeaufwendungen": https://esth.bundesfinanzministerium.de ... nhalt.html

• 4
  Zu den Beiträgen nach § 10 Absatz 1 Nummer 2 Satz 1 Buchstabe a EStG gehören auch Beiträge an ausländische gesetzliche Rentenversicherungsträger (vgl. BFH vom 24. Juni 2009, BStBl II 2009, S. 1000); die inländischen Beitragsbemessungsgrenzen zur gesetzlichen RV sind insoweit nicht maßgebend.

• Contributions in accordance with § 10 para. 1 no. 2 sentence 1 letter a EStG also include contributions to foreign statutory pension insurance institutions (see BFH of 24 June 2009, BStBl II 2009, p. 1000); the domestic contribution assessment limits for statutory pension insurance are not relevant in this respect.

My accountant has told me that it probably won't be accepted because the UK is neither an EU country nor an EWR-Staat.
UK-Pension.jpg
I'm struggling to actually find this written in law though.

Please ask your accountant to read on in § 10 (2) Nr. 2 EStG and he will find: https://dejure.org/gesetze/EStG/10.html

• (2)
  1The deduction of the amounts specified in paragraph 1 numbers 2, 3 and 3a (pension expenses) is subject to the condition that they
  ...
  2. are paid to
  
  a) 1Insurance companies,
  aa) which have their registered office or place of management in a Member State of the European Union or a signatory state to the Agreement on the European Economic Area and are authorised to conduct insurance business in Germany, or
  bb) which are authorised to conduct business in Germany.
  2In addition, contributions are only taken into account if they are amounts within the meaning of paragraph 1 number 3 sentence 1 letter a to an institution that provides other cover in the event of illness within the meaning of Section 5 paragraph 1 number 13 of the Fifth Book of the German Social Security Code or cover comparable to aid or free military welfare within the meaning of Section 193 paragraph 3 sentence 2 number 2 of the German Insurance Contract Act.3 This applies mutatis mutandis if a taxpayer who is neither domiciled nor ordinarily resident in Germany acquires insurance cover within the meaning of paragraph 1 number 3 sentence 1 with the contributions,
  
  b) occupational pension schemes,
  
  c) a social security institution <-- this is the relevant part
  
  d) a provider within the meaning of § 80.

Thanks Panda!

[GaryC]

Another question here....

On the nice letter I received from HMRC listing the years I can pay for, there are 2 payment dates listed for each year:
1. Payment date without penalty
2. Final time limit

The payment without penalty date for all years except the last one (2023-2024) is 5th of April 2025.
I would prefer to not pay everything right now if possible & the final time limits for the last 5 years on the list are 5th of April 2026, 2027, 2028 etc.

My question is: If I choose to delay those 5 years until just before the final time limits, what penalties am I looking at?

Cheers!

The letter will tell you to speak to DWP Future Pension Centre before paying anything to make sure you pay only, years that will increase your pension. I think we discussed that previously. Since then the process has changed as the phone lines are clogged so people have to submit a call back request from to DWP. This stops that 5 April clock again until DWP replies. They are talking about 8 weeks but I can't see them being able to be that quick. the link is https://secure.dwp.gov.uk/request-a-cal ... ntact-form.

Anyway, to your case. Those 2 columns are misleading in my view as there is no "penalty" in the sense of a fine or penalty for some sort of transgression. It just means the price goes up, and the year finally goes out of date for payment.

At the moment the absolute deadline for years 2006/07 to 2018/19 has been extended until 5 April 2025. After that date (subject to what I have just written) those years can no longer be paid, so that is a hard deadline.

The other years 2019/20 onwards had their prices frozen at 5 April 2023 rates when the 2-year extension was announced. What that means is that on 6 April the cost of all years except 2023/24 and 2024/25 at Class 3 rates and 2024/25 at Class 2 rates, will increase in price to the 2025/26 rates of £182 for Class 2 and £923 for Class 3.

From April 2026, 2019/20 falls off and the price for the others increases to the 2026/27 rates, and so on.

[Eric7]

Another question here....

On the nice letter I received from HMRC listing the years I can pay for, there are 2 payment dates listed for each year:
1. Payment date without penalty
2. Final time limit

The payment without penalty date for all years except the last one (2023-2024) is 5th of April 2025.
I would prefer to not pay everything right now if possible & the final time limits for the last 5 years on the list are 5th of April 2026, 2027, 2028 etc.

My question is: If I choose to delay those 5 years until just before the final time limits, what penalties am I looking at?

Cheers!

The letter will tell you to speak to DWP Future Pension Centre before paying anything to make sure you pay only, years that will increase your pension. I think we discussed that previously. Since then the process has changed as the phone lines are clogged so people have to submit a call back request from to DWP. This stops that 5 April clock again until DWP replies. They are talking about 8 weeks but I can't see them being able to be that quick. the link is https://secure.dwp.gov.uk/request-a-cal ... ntact-form.

Anyway, to your case. Those 2 columns are misleading in my view as there is no "penalty" in the sense of a fine or penalty for some sort of transgression. It just means the price goes up, and the year finally goes out of date for payment.

At the moment the absolute deadline for years 2006/07 to 2018/19 has been extended until 5 April 2025. After that date (subject to what I have just written) those years can no longer be paid, so that is a hard deadline.


The other years 2019/20 onwards had their prices frozen at 5 April 2023 rates when the 2-year extension was announced. What that means is that on 6 April the cost of all years except 2023/24 and 2024/25 at Class 3 rates and 2024/25 at Class 2 rates, will increase in price to the 2025/26 rates of £182 for Class 2 and £923 for Class 3.

From April 2026, 2019/20 falls off and the price for the others increases to the 2026/27 rates, and so on.

Thanks Gary!

One last (hopefully) question - I want to pay multiple years. Do I just add up the amounts for those years and do a single bank transfer? Then contact HMRC later to assign the payments to the correct years? I assume the transfer should be done in pounds to ensure the exact amount is transferred?

[GaryC]

You can pay in € if you want but don't ask me how you know how much to pay, so £ would be better.

HMRC prefers a single payment but asks that if you pay in multiple transactions, each payment is at least a full year.

Most people seem to do what you describe - pay - wait - use the NI chat function on the contact NI page to check the payment(s) has arrived and to confirm the years you are paying. If HMRC allocate to the wrong years you will need to get them to re-allocate.

If you are within 6 months of pension age, you should mention it, so that your case is prioritised to hopefully ensure that DWP does not have to later recalculate your pension.

[Mousiemouse]

HI, Slight variation if I may (was unsure where else to post)
I am using Elster to complete my tax return for the first full year as an employee in Germany and was wondering where I can enter the employees contribution to gesetzliche rentenversicherung for the year? All cousel appreciated!

[PandaMunich]

HI, Slight variation if I may (was unsure where else to post)
I am using Elster to complete my tax return for the first full year as an employee in Germany and was wondering where I can enter the employees contribution to gesetzliche rentenversicherung for the year? All cousel appreciated!

Anlage Vorsorgeaufwand, line 4: https://www.steuertipps.de/finanzamt-fo ... rgeaufwand
But you don't need to fill it in, the social security you paid and your salary itself have been reported electronically to the Finanzamt by your employer and even if you do not fill in these details, the Finanzamt will automatically add them to your tax return.

All the dark grey fields that have the white "e" (for already reported electronically to the Finanzamt) next to them are filled in by the Finanzamt with their own data, no matter what you declare in them, i.e. these fields will get overwritten by the data that is already in the Finanzamt's database:

2025-03-27 13_37_02-aav_anlage_vorsorgeaufwand_2024 (1).pdf - Adobe Acrobat Pro.jpg (1.04 KiB) Viewed 6703 times

[Mousiemouse]

Thank you very much. That is very helpful.
Regarding the amount I paid, is it actually tax deductible?
Thanks again

[PandaMunich]

Regarding the amount I paid, is it actually tax deductible?

Yes, but it has already been considered by your employer, i.e. you already paid less Lohnsteuer every month because of this.
--> nothing extra to be gained because of this in your tax return.

[Mousiemouse]

Thanks for clarifying