Article 18 Pensions/ Social Security Payments/ Annuities

Transcription

1 Article 18 Pensions/ Social Security Payments/ Annuities C.A. Divakar Vijayasarathy This paper is a copyright of Divakar Vijayasarathy & Associates. The author and the firm expressly disown their liability on any consequence or action taken on the basis of the content of this publication. The research report is only an interpretation of the statute/ legislation with related clarifications and shall not be construed as a professional opinion for any purpose. Divakar Vijayasarathy & Associates Chartered Accountants P h : / 2 8 F a x : / 0 6 / Divakar Vijayasarathy & Associates

2 Contents Pensions/ Social Security Payments Article 18 Particulars Page No 1 Article 18 Taxation of Pensions/ Annuities etc Model Convention 3 2 Incidence of Taxation 4 3 India Specific Treaties 5 4 Indo US Treaty Article Divakar Vijayasarathy & Associates

3 1. Article 18 Taxation of Pensions, Annuities Dividends Model Convention Clause Article 18A: 1 Pensions (not including pensions referred to in Article 19) and other similar remuneration paid to a resident of one of the Contracting States shall be taxable only in that State. 2 Notwithstanding the provisions of para 1, pensions paid and other payments made under a public scheme which is part of the social security system of a Contracting State or a political sub division or a local authority thereof shall be taxable only in that state. Article 18B: 1 Pensions (not including pensions referred to in Article 19) and other similar remuneration paid to a resident of a Contracting States may be taxed in that State. 2 However, such pension and other similar remuneration may also be taxed in the other Contracting State if the payment is made by a resident of that other state or a permanent establishment situated therein. 3 Notwithstanding the provisions of para 1 and 2, pensions paid and other payments made under a public scheme which is part of the social security system of a Contracting State or a political sub division or a local authority thereof shall be taxable only in that state. 3 Divakar Vijayasarathy & Associates

4 2. Incidence of Taxation Pensions/ Social Security Payments Article 18 Article Nature of Income Place of taxation 18A(1) Pension and other similar remuneration Country of Residence of the recipient. from Non Government employers 18A(2) Social Security payments Country of Source 18B(2) Pension and other similar remuneration Country of Source from Non Government employers who are residents of the Contracting State or have a permanent establishment 18B(1) Pension and other similar remuneration from any other Non Government Option to tax in Country of Residence of the recipient. employers 18B(3) Social Security payments Country of Source Note: - Existence of employer employee relationship is mandatory except in the case of social security payments. - Pension also includes pensions received by widows, orphans and other similar payment such as annuities paid in respect of past employment. - Tax relief of contributions to retirement schemes in the home country may be allowed as a deduction refer KV Page Divakar Vijayasarathy & Associates

5 Treaty Pension from Non Government employers who are residents / have a PE in the Contracting State Pensions/ Social Security Payments Article India Specific Treaties Pension from other Non Government employers Social Secutiry Contributions Indo Australia (18) Country of Residence Country of Residence Not covered NA Remarks if any Indo Bangladesh (20) Country of Source Country of Source Not covered Pension means periodic payments made in consideration for services rendered or by way of compensation for injuries received. Annuity, means a stated sum payable periodically at stated times, during life or during a specified or ascertainable period of time, under an obligation to make the payment in return for adequate and full consideration in money or money s worth. Indo Brazil(18) Country of Residence Country of Source Country of Source Alimony is also covered within the scope. The terms Indo Canada (18) Country of Source Country of Source Country of Source NA Indo China (18) Country of Residence Country of Residence Country of Source NA pensions and annuity have been defined within the Indo France (20) Country of Residence Country of Residence Country of Source The terms pensions and annuity have been defined. Indo Germany (18) Country of Residence Country of Residence Not covered NA Indo Japan (18) Country of Residence Country of Residence Not covered NA Indo UK (20) Country of Residence Country of Residence Not covered NA Indo South Africa (18) Country of Residence Country of Residence Not covered Pension and annuity has been defined. Article. 5 Divakar Vijayasarathy & Associates

6 4. INDO US DOUBLE TAXATION AVOIDANCE AGREEMENT ARTICLE 20 Nature of Receipt Tax incidence Remarks Non Government pensions Country of Residence pension means a periodic payment made in consideration of past services or by way of compensation for injuries received in the course of performance of services. 4. The term annuity means stated sums payable periodically at stated times during life or during a specified or ascertainable number of years, under an obligation to make the payments in return for adequate and full consideration in money or money s worth (but not for services rendered). Social Security payments Country of Source Alimony Country of Residence alimony as used in this paragraph means periodic payments made pursuant to a written separation agreement or a decree of divorce, separate maintenance, or compulsory support, which payments are taxable to the recipient under the laws of the State of which he is a resident. Periodic payments for the support of a minor child made pursuant to a written separation agreement or a decree of divorce, separate maintenance or compulsory support paid by a resident of a Contracting State to a resident of the other Contracting State Country of Residence NA 6 Divakar Vijayasarathy & Associates

7 Thank you for your patience 7 Divakar Vijayasarathy & Associates