Austria Challenges Germany's New Pension Tax Ruling

02 Apr 2013

A change to German tax law will require around 150,000 Austrians currently in receipt of a German pension to pay taxes on their income, with retroactive effect from 2005.

The German tax authorities will shortly send out demands for Austrian pensioners to submit a tax declaration dating back to 2005. The move follows the decision to modify German legislation. The new legislation provides that German pensions paid out to foreign taxpayers will be subject to taxation in Germany.

The Austrian Finance Ministry intends to challenge the decision to seek hefty back payments and to seek a sustainable solution to protect low-income pensioners in particular. Wolfgang Nolz, the Austrian Finance Ministry's new capital markets presenter, is to lead a delegation to the German tax authorities in Neubrandenburg to request that tax exemptions, reductions, deferrals, or paying in installments be allowed in certain such cases.

Nolz said that it is unprecedented in European history that a country suddenly decides to tax pensions and to seek arrears many years later. Some pensioners will be faced with huge tax bills amounting to several thousand euros a year, Nolz pointed out, insisting that it is simply not feasible for aging pensioners to settle this sum in one go.

The Austrian Finance Ministry aims to install an ombudsman by May to support those affected by the decision. Until then, Austrians may seek advice from the Austrian tax authorities. .

Source: http://www.tax-news.com/news/Austria_Challenges_Germanys_New_Pension_Tax_Ruling____60302.html