Overview
- Germany’s Federal Fiscal Court held that Portugal’s non-habitual resident regime does not block German taxation where Portugal imposes no tax on the pensions.
- The decision covers pensions from professional pension schemes and, according to the court, also extends to German statutory social-security pensions under the same treaty provision.
- Administration for nonresident pension taxation is centralized at Finanzamt Neubrandenburg, which can order source withholding of about 25 percent that may be reduced on request.
- Retirees affected in Portugal should expect possible reassessments and seek advice, noting typical assessment periods of four years or five years for negligent understatement and the option of voluntary self-disclosure.
- Portugal’s NHR rules grant a ten-year full exemption for pre–April 1, 2020 entrants and a 10 percent rate for later entrants, but Germany may tax where Portugal does not actually levy tax.