Are you a Canadian resident receiving a German pension?

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 12 Week Deadline: German Tax Returns for Canadians Receiving German Pensions


Siegfried Merten, MFA from St. Catharines, Ontario reports that the German Government is requiring the filing of German tax returns by some recipients of German pensions for the period 2005-2009. Non-compliance will result in an estimated tax and late filing penalties. He tells us more in this interview with KBR Staff:

Q. What is the issue with the German Tax Department, Siegfried?

A. Canadian taxpayers receiving German pensions may receive a letter from the German equivalent to CRA, Finanzamt Neubrandenburg (RiA), requesting the German Tax Returns for the years 2005-2009 to be filed within 12 weeks. It’s very important that clients of tax and financial advisors be contact immediately to be urged to open the mail and not to ignore it!

Q. What should be done?

A. If you do not comply the Tax Office has the authority to estimate your income and tax it accordingly. They may also levy penalty charges. Even after they have estimated everything you are still compelled by law to file the 5 tax returns and may be subjected to a fine.

Q. But isn’t that double taxation if you have filed your income properly on the Canadian tax returns?

A. If you have been declaring your German Pension on your Canadian Tax Return there should be no taxes owing to Germany since you have paid tax on them to Canada — but you still have to file the returns.

14 Responses to “Are you a Canadian resident receiving a German pension?”

  • Marta Duckworth:

    For residents in Quebec it is triple taxation. The Finanzamt (RiA) sent me the tax forms to complete 2005-2009 and then followed a statement how much I owed for each year (incl. fine for late payment for the year 2005) and the time given to settle was rather short. When I called Neubrandenburg today I was told that forms for 2010 would be sent – only on request – and the people there have no answer why we are taxed in Canada and Germany. Also, they do not send out confirmation of monies remitted to them so I will have to use my bank confirmation of remittance for the Federal and Provincial income tax declarations in the hope that I will get a refund for the years 2005-2009 and not declare the 2010 German Pension which is a rather pitiful amount to start with. Does the German government hope that some people will recind their German pension?

  • wilhelmt:

    I had reported my German pension in Canada and payed tax on halve of the German Pension.
    I also filed in Germany “Anlage R” for 2005,2006,2007 and 2008, and had to pay 25% on halve of my German pension. I have been told by the Finanzamt Neubrandenburg that it is correct to file and pay taxes in both countries, but I should be credited the German paid taxes in Canada acording to the “German/Canadian tax treaty section 23″ to prevent double taxation.

    Canada has a “foreign tax credit formula” which will pay back only a calculated amount of the German taxes I paid, providing I have taxes to pay in Canada. If my Canadian income is so low that I would not have to pay any tax in Canada, I would not get a penny back from Canada of the tax paid in Germany. If my Canadian taxable income is hi, let us say $100000 the “foreign tax credit” calculation, would pay all of my German taxes back.
    I have not filed in Germany for 2009 and will not file in Germany for 2010.

    I have appealed the German decision to tax me and hope for positive clarification of the treaty’s concerning prevention of double taxation. I am waiting for a fair outcome and will tell all German/Canadian pensioners not to report and file the German pension unless there is fair deal.

    Any positive information is much appreciated.

    Wilhelm Teipel

  • evakeil:

    Hello,

    The answer to Q is incorrect. I have filed German returns after the fact. The client has to pay the tax in Germany. The Canadian tax returns need to be amended showing a foreign tax credit for the tax payable and the client will get a tax refund for the portion of the German pension here in Canada.

    Regards,
    Eva Keil

  • Ken K:

    A German friend of mine read a section of the letter he received from Germany. It calls for paying 600 euros but the interesting part was that if the recipient was a victim of war crimes the income was not taxable. Has anyone gotten a similar letter?

  • M.H.Grimm:

    Yes we have received the same letter, in which the Gov. of Germany is asking for tax money (2oo5-2oo6)and also stating in their letter that if we were victims of war crimes we schould ask for free taxation….I don t understand what is going on. We have paid our taxes here in Canada hence we lieve here and we are up to date with all payebles. We only receive ONE pension, how come we have to pay DOUBLE ????- taxes ??

  • Ingrid:

    I can not find a german income person here in Windsor Ontario does anybody know of any tax preperes in southern Ontario.

    Thanks in advance
    Ingrid

  • Lena:

    I have a few questions regarding the German income tax. According to a treaty between the Canadian Government and the German Government, the German Government was obligated to inform their pension receptions in 2005, that the taxation part has changed. German didn’t do that. Now, they are starting to make people back pay taxes, which are for a low income pensioner too high to pay back at once. They tell you to correspond in German and take a translator, which is rather expensive too.
    I belief that Germany has no more rights to deal with people that way then Canada has. Fine, if you have to pay taxes, so will be it. But coming out of the bush with no advanced information after seven years, is not justified.
    So, what can they do if you just ignore them and don’t pay the taxes?
    They can cut you of your pension, I guess, but can they make you pay a penalty under Canadian law? If so, how would the proceed with that?
    I am curious. Germany has a very intimidating and rude way of dealing with the general public.
    Lena

  • S. Ingersoll:

    This whole German tax collection process must be the rudest of its kind, almost criminal. Certainly by Canadian standards. Beats even the IRS.

    But first of all, the dual taxation exemption is of little interest to many Canadian seniors receiving a small-to-medium pension for their hard work in postwar Germany. If your total income, pensions and all, is below the Canadian limit for seniors, you pay nothing here, even get credits and the like.

    But the German-imposed tax on your German pension you will pay just the same. Their tax-free income-limit will not apply to you, no matter how small your earned pension. They will ask for their cut of at least 25% on earlier pensions, no matter what.

    To be sure, you can apply for “unlimited tax liability,” in which case you file your total world-wide income — telling them sundry and all — but the applicable limits and exemption are so low as to make it useless for most pensioners here in Canada.

  • katherine:

    My husband is receiving a disability pension from Germany. He receives no other pension or financial help from anywhere yet Germany is charging him so much tax on his little pension. For example, in one year he receives 7200 euros. Half of this is taxable (so 3600 euros are taxable at a rate of 25%.) On this small pension for 1 year he must pay 900 euros. And with it being retroactive, he owes thousands of dollars. Is there some way out of this? Some exemption for someone receiving so little pension? He declared it on the Canadian tax forms but it was such a small amount he didn’t have to pay any Canadian taxes on it. Is there some clause in the law that could help him?

  • Peter:

    Can the German government request payment of taxes on pension if the individual receiving the pension is deceased? The request for payment was received after the individual died.Are there any obligations for executors or heirs to pay this tax for the deceased person.

  • norbert schmerl:

    Both my parents were receiving pension from the german government, but they both past away one past away in 2011 and the other in 2012. I have recieved letters from the german tax department, but as they are in german I have no idea what they are asking me. Di I still need to file their returns.

  • Ellen Cook:

    I will have to pay $25 000 for the taxes for 2005 – 2012 yet my husband is deceased and this was not my pension and he didn’t leave money. I had my own income paying heavy duty tax in Canada but I still have to pay for his taxes.

  • Just to update and clarify. The country that pays the pension has first right to taxation. If you live in a country that also taxes that pension they have to refund any double taxation amount. If the pension recipients NON GERMAN income is low and they do not pay any taxes in Canada they generally do not have to pay any taxes to Germany. The Heirs are responsible for any taxes owing on the pension income they had received from Germany. Canada has 16 tax information exchange agreements in place. Canada also has 3 tax treaties that include a provision called “Assistance in Collection.” Germany is one of them. Hoping that Germany can’t do anything if you just ignore everything is not a solution. May 8, 2013 Harper Government announced new measures to crack down on international tax evasion and aggressive tax avoidance.

  • Inge:

    Hello
    I read all your info re taxation of the German Pension my mother has been receiving. Due to the fact that she would owe around $1800.00 a yr. since 2006-2009.
    That is a lot of money for her to repay all at once. Is it possible for her to repay that amount. By refusing the pension from now on , and they withdraw the full amount until the taxes are paid back.
    I would appreciate a reply
    Thank you kindly
    Inge

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