State pension in 2 countries

homealone25

Hello, I have worked 28 years in the UK and paid NIC voluntarily to have the full state pension.
I have worked and am still working and paying into the Spanish state system (currently for 20 years) and am eligible for the Spanish state pension.
My question is can I receive the full state pension from the UK plus  the years I have paid into the Spanish state pension, so in effect 2  state pensions or can you only receive one full state pension.??
Thanks everyone 

QrizB

Each state pension is independent.

If you're entitled to both, you can claim both.

Suhusa

Getting two state pensions (from Germany and the UK) is exactly what I'm planning to get.

You'd have to check how it works in Spain but I won't even have to contact the UK for the UK pension. I've told the German pension system about the years abroad and they will forward the relevant form to the UK once I apply for the German pension.

The years I've worked in the UK also gave me a somewhat of an uplift in my predicted German pension amount (as well as access to a disability pension, should I need it) due to the overcomplicated way the German pension system works. (In the UK on the other hand I can only use my German years to lift myself over the 10 year eligibility criterion). Depending on how the Spanish system works, telling the Spanish about your UK work history may have no effect or a small effect.

pinnks

You will have the joys of your UK pension being taxable only in the UK and covered by the personal allowance but feeding into Progressionsvorbehalt to increase the tax rate on your income that is taxable in Germany.

Have you considered paying UK voluntary NI to increase your forecast?

1957DfurdPensionist

QrizB said:

Each state pension is independent.

If you're entitled to both, you can claim both.

My experience in a third EU country largely concurs with the other answers given above except that whilst the two state pensions may indeed be independently calculated (some like UK largely based on in-work contributions to the welfare system, others possibly only reliant on years of residence), the taxation implications at each end can be quite interesting.

Generally the taxation aspects may usually be as dictated by the relevant double-taxation agreements between the two countries, and within EU and EEA that may mean, as suggested by @pinnks that UK "State Pension" is not taxed by the EU country.

As a possibly interesting aside, I have seen indications in Nordic countries, who themselves typically have top heavy state employment, more so than in UK, that the definition of a foreign State Pension for local taxation exemption purposes might well extend to include a full pension provided by a foreign state employer such as a health service or civil service pension. That might discriminate positively towards foreign state sector pensioners.

Of less interest to younger would be pensioners, but perhaps more relevant to the last few baby boomers reaching retirement age abroad, I myself have entered into thus far informal discussion (if such a thing exists when talking to any tax office!) about whether UK contracted out equivalent pension should be treated as locally tax exempt state pension, even though it is payable via the contracted out private pension provider as GMP or simply as a separate solely HMRC rebated NI funded personal pension policy.  I am sure I am not the only one who has collected a bit of both and neither of mine are yet in payment. For the moment then, the local tax question on those so far remains somewhat hypothetical - in my mind at least!

And on the UK VC front, for boosting the UK state pension, in many cases it would seem that a solid work history abroad even if you have not been voluntarily paying Class2 from the outset, might qualify you to pay Class2 UK VC's retrospectively, not the four times more expensive Class3 rate.

I am sure each case in each country has its distinct quirks, foibles and pitfalls, so I offer the above as possibly relevant food for thought, not definite advice.

pinnks

My comment related only to the taxation of the UK state pension when resident in Germany (or a German state pension when resident in the UK) as provided for in Article 17(2) of the relevant double taxation agreement (DTA).

For the vast majority of situations across Europe the country of residence retains the sole right to tax the state pension and the paying country gives up that right.  Exceptions are Germany, Belgium, Bulgaria and Denmark.

Other pensions need to be viewed in the context of the relevant DTA.  In most cases, non-Government Service pensions, so non-public sector, are taxable in the country of residence, though there are exceptions like Germany/UK where some such pension are taxable only in the paying country.

And then there are Government Service pensions as listed in HMRC's guidance - generally public sector like Civil Service, teaching, police, military etc.  They are generally taxable only in the country paying the pension, though there is often an override that causes the pension to be taxable only in the country of residence if you also have citizenship of that country.

A contracted out pension is not a state pension in tax terms and is taxable like any other workplace or private pension under the terms of the relevant DTA.

Class 2 v Class 3 NIC for periods during which you are/were abroad is set out very clearly in the law and is based on your pre-departure work history and on your employment status for each week you are abroad.

1957DfurdPensionist

pinnks said:

My comment related only to the taxation of the UK state pension when resident in Germany (or a German state pension when resident in the UK) as provided for in Article 17(2) of the relevant double taxation agreement (DTA).

For the vast majority of situations across Europe the country of residence retains the sole right to tax the state pension and the paying country gives up that right.  Exceptions are Germany, Belgium, Bulgaria and Denmark.

Other pensions need to be viewed in the context of the relevant DTA.  In most cases, non-Government Service pensions, so non-public sector, are taxable in the country of residence, though there are exceptions like Germany/UK where some such pension are taxable only in the paying country.

Yes, I didn't mean to suggest all EU/EAA DTA's might have the same effect.  Thank you @pinnks for clarifying.  It is perhaps not surprising I guess with thirty odd countries now in EU/EAA with considerable differences in costs of living, and attitudes toward welfare benefits.  Having noted the four exception countries, however one might be forgiven for wondering what welfare traits Bulgaria might share with three of the richest economies in the west.


pinnks also said:

And then there are Government Service pensions as listed in HMRC's guidance - generally public sector like Civil Service, teaching, police, military etc.  They are generally taxable only in the country paying the pension, though there is often an override that causes the pension to be taxable only in the country of residence if you also have citizenship of that country.

So, as I touched upon, that does indeed suggest UK public sector pensioners residing in Europe, who do not have dual citizenship, are at a possible advantage in high taxation countries, where their private sector peers might suffer additional taxation on their UK private pensions.

Further, pinnks said:

A contracted out pension is not a state pension in tax terms and is taxable like any other workplace or private pension under the terms of the relevant DTA.

Bearing in mind the DTA's are expectedly all necessarily different, and it is the local country's tax authority interpretation that might count, do we know your assertion applies for sure?  We all now know that HMRC's various attempts at contracting out over five or more decades became an almost indeterminable mess especially after the practice was abolished in two very questionable hits.  And my own discussions with one European tax authority and their corresponding pensions authority colleagues indicate their own head-shaking view of this rather unique UK quagmire.  I shall pursue the matter a little further yet -  without contracting out, our locally tax exempt State Pensions might easily have been 35% higher.  So did the act of contracting out somehow take into account the extra DTA tax that might be payable on the private pensions of those of us who discovered nicer retirement locations courtesy of Ryanair and EasyJet?  No of course not.

Ultimately the contracting out commitments of GMPs and HMRC NI rebate-funded DC arrangements have been quietly abused by the private providers in multiple ways over the last three decades, e.g. non-essential DB wind-ups before 2004, back-to-back insurance company mergers with High Court sanctified heists and name changes on a number of funds.  Furthermore, who knows how accurate HMRC's COPE figures really are since so many of their original contracted out private pension providers(partners?) have ceased to exist, some as long as two decades since? What happened to their paper trails of GMP etc. in our pensions?

Finally, pinnks said:

Class 2 v Class 3 NIC for periods during which you are/were abroad is set out very clearly in the law and is based on your pre-departure work history and on your employment status for each week you are abroad.

Yes, if you like.  However, ambiguities exist which can be argued.  They are certainly worth arguing given the difference in retrospective Class2 and Class3 rates.  And one gaping ambiguity is that "suggestion" in UK law or at least in the official HMRC guideline interpretation that says you must be working in the UK immediately before going abroad in order for you to qualify for paying UK Class2 rates whilst abroad.  I am sure that isn't how most of us end up living more and more abroad than not.  That notion in law is way over simplified for 2025, and seems to assume we must have moved out of UK completely on a certain date before we became registered with another country abroad.  No, EU freedom of movement allowed exactly the opposite, even going back to the days of those wonderful pioneer characters in "Auf Wiedersehen, Pet!".

And for those who fancy the challenge of reducing their outlay on VC's, then in your discussions with Newcastle about how and when you ended up abroad, that's bound to get you on the same page of reality 

pinnks

I think you might find it helpful to read the OECD model tax treaty and the notes for each country that go with the application of that model treaty to create a treaty between 2 countries.  They are not driven by social security issues as they are taxation treaties, not social security treaties.  Each country's tax authority has a team of specialists in DTAs who act as competent authorities and negotiate the answer where there are differences of opinion about what the agreed DTA means.  Decisions are not left to local tax offices in either country.

The policy behind the treatment of salaries and pensions paid from public funds is that the governments on both sides, in accordance with the model treaty, will retain taxing rights.  The citizenship point is, I believe, largely historic from a time when people were a lot less internationally mobile but governments employed local citizens of a country to work in its embassy and in such cases all governments agreed it would be appropriate for those citizens to continue to pay tax in their country of residence.       

If you wish to pursue the contracted out pension issue, then go ahead but you need to be aware that DTAs are about how two countries have agreed to carve up taxation where both countries would otherwise be entitled to tax the same income under their domestic tax rules.

And on the Class 2/3 point I suggest you actually read what the law says and if you wish to achieve a change in that, then you'll need to lobby your MP. 

1957DfurdPensionist

I do thank you very much for engaging further @pinnks.  Very useful background.

Obviously DTA's require reconciliation of intention in at least two different languages if we are not in the Republic of Ireland! Your warning about intentional "carve up" of the potential pre-treaty tax take is heeded, so very much like DWP are often reluctant to confirm anything that is in the HMRC domain to interpret, other countries clearly have similar boundaries between tax and social welfare responsibilities.

Very much like our own DWP and HMRC, their counterparts in the country I am talking with seem day-to-day to operate with "rules of thumb" in mind on some of these issues rather than instantly resorting to the words in law and applying the most restrictive interpretation.  That may theoretically be wrong in both countries, but it is only human, and lobbying an MP is not the only way to change current practice.  A developing culture with an improved understanding of original intention might also do the trick, especially with a background of more sober and consensual parliament

One rule of thumb says that this EU country does not tax foreign "social pensions".  They do not default to calling them "state pensions".  The other rule of thumb is that they do tax foreign private pensions for the difference between the UK tax collected and what this EU country would otherwise expect to collect from one of their own citizen's local private pension income.

@pinnks, I can understand that with your deep knowledge of DTA's etc, you may think I am attempting to dance on a pin, if I am hoping to persuade anyone to consider a DC SERPS replacement personal pension policy as a social pension rather than a private pension.  However it struck me, particularly with the concept of "social" pension in mind, that it is particularly easy for me to show from historic HMRC publications, House Library technical notes, etc, and my particular HMRC and personal pension provider records, that the sole funding into my contracted out DC SERPS replacement policy came directly from HMRC and nowhere else, and exactly what part of my social pension it was to replace.

Those diverted funds were originally intended to fund Additional social pension.  However, encouraged by a quirky late 80s HMRC promotion to expand contracting out through their insurance company pension provider pals, after signing up for a normal shared contribution group personal pension membership, I was manipulated into quickly signing a separate application for what was described as "free money" by the same AXA Equity & Law rep.  I still have some of the accompanying blurb.  The promotion was an extra 2 years backdated HMRC contributions for signing.  As a side-effect, it actually left me with a weird two year overlap of two different types of Contracting Out, because I only ever worked for one PAYE employer simultaneously, and the immediate previous employer (10 years) had run a contracted out DB scheme covering the same 2 years!  As an aside, goodness knows how it affected my COPE calculated for those 2 years, and of course subsequently.

On Class2/Class3 yes I did read the law and guidance notes but in my own case candidly offered full transparency of flight records, work records, property sales, even informal care arrangements causing me to return frequently to UK.  It meant I successfully argued a course through some of the ambiguity and obsolete assumptions about how why and when normal outward-looking people in the 21st century move between countries (or even earlier á la Auf Wiedersehen, Pet!), and particularly the myriad of dates and push and pull attractions/motives involved between residences.  

pinnks

With the greatest of respect you are talking nonsense but if you wish to waste your time then go ahead.  I will not be wasting more of my time on this discussion.

1957DfurdPensionist

With the greatest of respect you clearly intended no respect whatever with that last post.  But I am sorry you got bored.

I appreciate that the first half of my last post may have meandered too far around, and maybe even plummeted headlong off the edges of your area of expertise, thus not making much sense in your book.  So perhaps that's where the nonsense lay. I apologise for that, but you actually dismissed my entire last post.

Perhaps I was not expected to publish as much as I remember about HMRC's late 80s DC contracting out initiative for example?  Or maybe as another 2 countries' state pensioner, I was not supposed to divulge how I got some of my UK Class3 VC costs reviewed and rebated?  Those are factual reports, and not nonsense, and as always were intended to help.