Cross-Border
Tax Law.
Handled Personally.

The taxation of cross-border social security pensions is governed heterogeneously across jurisdictions: some states apply the residence principle, others the source-state (paying-agent) principle. Since 2005, the OECD Model Tax Convention has permitted such pensions to be subsumed under the pension article (Article 18).
Two distinct questions are always decisive: which state holds the taxing right (the treaty’s distributive rule), and how the benefit is to be classified domestically (comparative-law qualification).
Where a foreign pension corresponds in its core substance to the German statutory pension insurance scheme, it is taxed by reference to the taxable portion (cohort-based taxation, Section 22 of the German Income Tax Act (EStG)).

Part 2 of the series turns to the payout phase: how distributions from foreign retirement plans are taxed when the recipient is tax-resident in Germany — a practical guide to the typical
payout scenarios.

When supervisory board members leave Germany, domestic nexus rules, withholding tax and the extended limited tax liability under § 2 AStG interlock in ways that are easy to underestimate. The article maps the pitfalls and shows how early, well-documented structuring
avoids them.