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- 1. Pensions and other similar remuneration (including pensions provided under a social security system and annuities) paid to a resident of a Contracting State shall be taxable only in that State.
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- 2. Notwithstanding the provisions of paragraph 1 of this Article, payments falling within that paragraph may also be taxed in the Contracting State from which they are derived, in accordance with the laws of that State, where:
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- (a) the right to claim the payments has been exempted from tax in that State, or contributions associated with the payments have been taken into account for the purposes of tax relief in that State; and
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- (b) the payments are not taxed in the Contracting State of which the recipient is a resident or in a third state, at the generally applicable rate for income derived from employment, or less than 90 per cent of the gross amount of the payments are taxed.
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- The preceding provisions of this paragraph shall apply only if the total gross payments which, pursuant to the preceding provisions, would be taxable in the Contracting State in which they arise, exceed an amount of 25,000 euros during the fiscal year concerned.
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- 3. Notwithstanding the provisions of paragraphs 1 and 2 of this Article, if a lump-sum payment is paid before the date on which the pension commences, it may be taxed in the Contracting State from which it is derived. However, if the lump sum is paid on or around the commencement of a periodic pension, it shall be taxable only in that State.
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- 4. For the purposes of paragraph 2 of this Article, payments shall be deemed to be derived from a Contracting State to the extent that the right to claim the payments has been exempted from tax in that State or the contributions associated with them have been taken into account for the purposes of tax relief in that State. The transfer of a pension from a pension scheme in a Contracting State to a pension scheme in another state shall not restrict the taxing rights of the first-mentioned State under this Article.
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- 5. The competent authorities of the Contracting States may by mutual agreement settle the mode of application of paragraph 2 of this Article.
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- 6. Contributions made by or on behalf of an individual who exercises employment or self-employment in a Contracting State (“the host state”) to a pension scheme that is recognised for tax purposes in the other Contracting State (“the home state”) shall, for the purposes of:
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- (a) determining the individual’s tax payable in the host state; and
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- (b) determining the profits of his employer which may be taxed in the host state;
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- be treated in that State in the same way and subject to the same conditions and limitations as contributions made to a pension scheme that is recognised for tax purposes in the host state, to the extent that they are not so treated by the home state.
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- 7. Paragraph 6 applies only if the following conditions are met:
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- (a) the individual was not a resident of the host state, and was participating in the pension scheme (or in another similar pension scheme for which the first-mentioned pension scheme was substituted), immediately before he began to exercise employment or self-employment in the host state; and
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- (b) the pension scheme is accepted by the competent authority of the host state as generally corresponding to a pension scheme recognised as such for tax purposes by that State.
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- 8. For the purposes of paragraphs 6 and 7:
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- (a) the term “pension scheme” means an arrangement in which the individual participates in order to secure retirement benefits, including benefits for widow and orphan support, payable in respect of the employment or self-employment referred to in paragraph 6;
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- (b) a pension scheme is recognised for tax purposes in a Contracting State if the contributions to the scheme would qualify for tax relief in that State and if payments made to the scheme by the individual’s employer are not deemed in that State to be taxable income of the individual.