My client, a South African resident, receives a monthly pension from her late husband and this pension comes from Germany as he was a German citizen. Is this pension taxable in RSA?
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
Paragraph 1, of Article 16 of the RSA / Germany treaty, deals with pensions and reads as follows:
“Pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment, shall be taxable only in that State if such income is subject to tax in that State.”
We accept, when you state that “he was a German citizen”, you imply that he was a resident of Germany (being a “person who is resident in the Federal Republic (subject to unlimited tax liability) for the purposes of German tax”).
The proviso, to section 9(2)(i), of the Income Tax Act may be relevant, and reads as follows:
Provided that if the amount is received or accrues in respect of services which were rendered partly within and partly outside the Republic, only so much of that amount as bears to the total of that amount the same ratio as the period during which the services were rendered in the Republic bears to the total period during which the services were rendered must be regarded as having been received by or accrued to the person from a source within the Republic; …