Tax on pensions

Where to buy? Where can I find? How do I? Getting started.
Post Reply
DMC
Posts: 1257
Joined: Thu Nov 16, 2006 9:17 am

Tax on pensions

Post by DMC » Thu Mar 14, 2019 1:00 pm

I have a small private pension policy dating back to when I lived in the UK. (I am British). That will start to pay out when I am 60 in a couple of months. I have the option of taking a portion of the pension pot as a tax-free lump sum. Of course that means free of UK tax but would I have to pay Finnish tax on that lump sum, if I take it?

I will also receive a small monthly payment after this. Am I correct in assuming I need to pay tax in Finland on that, and not pay tax in the UK?



Tax on pensions

Sponsor:

Finland Forum Ad-O-Matic
 

FinnGuyHelsinki
Posts: 1026
Joined: Sun Nov 08, 2009 8:52 pm

Re: Tax on pensions

Post by FinnGuyHelsinki » Thu Mar 14, 2019 1:17 pm

DMC wrote:
Thu Mar 14, 2019 1:00 pm
I have a small private pension policy dating back to when I lived in the UK. (I am British). That will start to pay out when I am 60 in a couple of months. I have the option of taking a portion of the pension pot as a tax-free lump sum. Of course that means free of UK tax but would I have to pay Finnish tax on that lump sum, if I take it?

I will also receive a small monthly payment after this. Am I correct in assuming I need to pay tax in Finland on that, and not pay tax in the UK?
See https://www.vero.fi/en/individuals/tax- ... om-abroad/


DMC
Posts: 1257
Joined: Thu Nov 16, 2006 9:17 am

Re: Tax on pensions

Post by DMC » Mon Mar 18, 2019 3:56 pm

Unfortunately that site doesn't answer my question so I called Vero to ask them. The lady I spoke to didn't know the answer so she promised to find out and call me back, which she did today. The answer was a definite maybe. It seems I have 4 options:
  • Don't take the lump sum, so no tax payable on it. Obvious.
  • Take the lump sum and declare it on my tax forms at the end of the tax year. Vero will then decide whether to tax the lump sum as income or treat it as pension. So I would have to take the lump sum and take a chance on whether I will need to pay tax on it.
  • Decide to take the lump sum and ask Vero to adjust my tax %age now on that basis, rather than waiting to possibly be taxed later. Of course if I didn't then take the lump sum I would be paying tax on non-existent income.
  • Apply for a decision now. This is the only way to get a definite decision in advance of having to decide whether to take the lump sum. All fine and dandy except there is a 420 euro fee to ask for that decision. Paying the tax authorities to decide how much tax I have to pay is, IMHO, ludicrous.
I was hoping someone else had already gone through this and could tell how it worked out.


DMC
Posts: 1257
Joined: Thu Nov 16, 2006 9:17 am

Re: Tax on pensions

Post by DMC » Wed Mar 20, 2019 2:48 pm

Answering my own question in case anyone searching for info later finds this.

I spoke to HMRC in the UK. They quoted article 19 of the treaty between UK & Finland covering double-taxation and said pensions should only be taxable in the country where they arise (UK in my case) and this also covers any lump sum taken from the pension pot. The Vero contact I spoke to was very pleasant and helpful but the HMRC (also pleasant and helpful) seemed a lot more knowledgeable and able to give a definite answer.


Post Reply