I am considering what route to take with my Irish defined contribution pension fund. I have 2 options in Ireland:
1) use the fund to buy a traditional annuity, which would be taxable in Germany as far as I understand it or
2) use the fund to invest in a so-called "approved retirement fund" (ARF), from which annual drawdowns are made.
I believe that Ireland and Germany have agreed in their DTA that the drawdowns (called "distributions" in Irish tax law) from an ARF shall only be taxable in Ireland. Source:
https://www.bgbl.de/xaver/bgbl/start.xa ... 93983898141. With reference to this Agreement as a whole:
a) Retirement Benefit Schemes in Ireland
It is understood that,taking account of
aa) tax-relief given for contributions or premiums paid in re-
spect of retirement benefit schemes, retirement annuity
contracts or other pension products in accordance with
Part 30 of the Taxes Consolidation Act 1997 of Ireland,
and
bb) the exemption from tax of income and gains accruing to
a fund(referred to in this paragraph as a “pension fund”)
created by such contributions or premiums,
distributions (for the purposes of section 784A of the Taxes
Consolidation Act 1997) from an approved retirement fund
(within the meaning of that section) that was created by the
transfer of accrued rights or assets from a pension fund shall
only be taxable by reference to the provisions of that section,
notwithstanding any provision of this Agreement.
(Part of the protocol on page 22)
So, I think the taxation of the distributions from the ARF is clearly handed over to Ireland. Is that correct?
However, there is the question of the taxation of the growth of the ARF. If this was a German ETF etc. there would be a Vorabpauschale to consider. Is there a Vorabpauschale applied to an ARF where the taxing rights for the distributions are ceded to another country, in this case Ireland?
I suspect this is a very niche area but maybe someone has done it?