Knowledge Bureau Receives Response from German Revenue Office

All Canadian taxpayers who receive German pension income from German national institutions are being asked to file tax returns in Germany for tax years 2005 and onward. The German authorities will assess these returns to determine if taxes are owing. A response to an enquiry from The Knowledge Bureau to the German tax administration was received on December 10^th and the key points are summarized below.

1. Forward German income tax returns for 2005-2009 to:

Finanzamt Neubrandenburg (RiA)

Neustrelitzer Strafle 120

17033 Neubrandenburg

Deutschland

2. Tax forms (German language only) are available:

http://www.regierung-mv.de/cms2/Regierungsportal_prod/Regierungsportal/de/fm/

or

http://www.formulare-bfinv.de/

3. Pension income documentation must be attached and details of the last residence and/or place of employment in Germany should be included.

4. A twelve week deadline from the date of notification has been given and an extension can be requested under certain circumstances.

5. Foreign tax credits: The tax treaty between Canada and Germany allows for the taxing of German pension in both Canada and Germany. However, a foreign tax credit is available in Canada for taxes paid on the same income in Germany. Canadian taxpayers should claim the amount of pension income that is taxable in Germany. German taxes paid on the pension income will be deducted from Canadian tax owing on the income as per Article 23 1. of the tax treaty:

Article 23

Relief from Double Taxation

"1. In the case of a resident of Canada, double taxation shall be avoided as follows:

(a) Subject to the existing provisions of the law of Canada regarding the deduction

from tax payable in Canada of tax paid in a territory outside Canada and to any

subsequent modification of those provisions, which shall not affect the general

principle hereof, and unless a greater deduction or relief is provided under the laws of

Canada, German tax (other than capital tax) payable in accordance with this

Agreement on profits, income or gains arising in the Federal Republic of Germany

shall be deducted from any Canadian tax payable in respect of such profits, income or

gains.î

Provisions may be available for more favorable tax treatment if 90% or more of the taxpayer's income is from Germany and the remaining income falls within certain amounts.

6. Professional help.

It is strongly suggested that professional tax advice be obtained from a German-speaking tax professional with in-depth knowledge of German tax legislation. However, official representation in Germany by Canadian professionals is discouraged. Consultation with a specialist such as Siegfried Merten, MFA, should enable affected citizens to complete their tax filing requirements with Germany.

Please see the links below that have been posted by the German Consulate General in Vancouver. They contain the tax treaty between Canada and Germany, CRA information on the taxation of German pensions and German language websites.

http://www.vancouver.diplo.de/Vertretung/vancouver/en/Taxation_20of_20German_20old_20age_20pensions.html

http://www.vancouver.diplo.de/Vertretung/vancouver/en/04/TaxationGermanPension__Seite.html

Additional Resources: Cross Border Taxation Course and EverGreen Explanitory Notes