Germany’s Federal Fiscal Court reverses a lower court decision by ruling that Germany may tax Canadian resident recipients of German social security pensions

In May 2018, it was announced in Germany that the Federal Fiscal Court (the Bundesfinanzhof) overturned a lower court ruling by determining that Article 18 of the Canada-Germany Tax Agreement allows Germany to tax German social security pensions received by residents of Canada. In Canada, foreign tax credits can be claimed by Canadian residents for German taxes paid on these pensions. Therefore, the decision of the Federal Fiscal Court in Germany does not affect the Canada Revenue Agency’s administration of the Agreement.

Case citation: BUNDESFINANZHOF Urteil vom 20.12.2017, I R 9/16 - Beschränkte Steuerpflicht für in das Ausland gezahlte Rentenversicherungsleistungen