Article 17 of the DTA is clear:
ARTICLE 17
Pensions
(1) Subject to the provisions of paragraph (2) of Article 18 of this Convention, pensions and other similar remuneration paid to an individual who is a resident of a Contracting State, shall be taxable only in that State.
(2) Notwithstanding the provisions of paragraph (1) of this Article, a lump sum payment derived from a pension scheme established in a Contracting State and beneficially owned by a resident of the other Contracting State shall be taxable only in the first-mentioned State.
(Incidentally, art 18 deal with Government Pensions)
So ... when I retire my pension from my UK pension will be taxable in PL, where I am resident, but any lump sum will be taxable only in the UK. That, for the record, is an understood.
But the UK has proposed a major change. From April 2015 anyone aged 55 or over and in a defined contribuion scheme will be able to take 100% of their accumulated pension pot, 25% tax free (as now) and the remainder taxable at marginal tax rates (so 0% to 45%, whereas for those who CAN the current rate is 55%).
So, will PL seek to tax the 75%. Does anyone see any valid grounds for PL to TRY to tax it? On the face of it, one might argue it's a capitalised annuity, but that's he opposite of reality - it's capital which I've chosen not to buy an annuity with, so logic must be that it retain the nature of capital, not income.
The UK, on the face of it, gets the tax ... and I'd get full personal allowances and basic rate band ... and as I'm in three plans from three successive employers, I can spread retirement over three years to reduce the overall tax take.
Thoughts?
ARTICLE 17
Pensions
(1) Subject to the provisions of paragraph (2) of Article 18 of this Convention, pensions and other similar remuneration paid to an individual who is a resident of a Contracting State, shall be taxable only in that State.
(2) Notwithstanding the provisions of paragraph (1) of this Article, a lump sum payment derived from a pension scheme established in a Contracting State and beneficially owned by a resident of the other Contracting State shall be taxable only in the first-mentioned State.
(Incidentally, art 18 deal with Government Pensions)
So ... when I retire my pension from my UK pension will be taxable in PL, where I am resident, but any lump sum will be taxable only in the UK. That, for the record, is an understood.
But the UK has proposed a major change. From April 2015 anyone aged 55 or over and in a defined contribuion scheme will be able to take 100% of their accumulated pension pot, 25% tax free (as now) and the remainder taxable at marginal tax rates (so 0% to 45%, whereas for those who CAN the current rate is 55%).
So, will PL seek to tax the 75%. Does anyone see any valid grounds for PL to TRY to tax it? On the face of it, one might argue it's a capitalised annuity, but that's he opposite of reality - it's capital which I've chosen not to buy an annuity with, so logic must be that it retain the nature of capital, not income.
The UK, on the face of it, gets the tax ... and I'd get full personal allowances and basic rate band ... and as I'm in three plans from three successive employers, I can spread retirement over three years to reduce the overall tax take.
Thoughts?