Tax Treaty Case Law around the Globe 2018

S. 203Chapter 19 Germany: Pensions in Respect of Services Rendered to States

Roland Ismer

19.1. Introduction

The mobility of employees and the resulting problems of taxation have been discussed for many years both on an EU basis and with respect to treaty law. However, current employees are not the only ones becoming increasingly mobile with respect to where they work and live. Retirees are also choosing to live countries other than the one in which they used to work. Some move after retirement while others return to their country of residence following employment in one or several other countries.

Taxation of income from employment is regulated by article 15 of the OECD Model, whereas article 18 of the OECD Model governs the taxation of income from pension payments. Article 19 of the OECD Model contains a special provision for services rendered to a state, with respect to income from both current and former activities. Regarding pension payments for services rendered to a state, the paying state principle generally applies, i.e. the state paying the remuneration and to which the services were rendered has the exclusive taxing rights. Exclusive taxing rights are only allocated to the residen...