Pensions and Annuities
(1) Notwithstanding the provisions of paragraph (2) of the Article 18, pensions, annuities and other similar remuneration, arising from a Contracting State and paid to a resident of the other Contracting State, shall be subject to taxation only in that other State.
(2) Nevertheless, payments made pursuant to Social Security laws of a Contracting State, may likewise be submitted to taxation in that State according to its domestic regulations, when the event that generates the right to collect the income takes place subsequent to the 31st day of December of the year 2014. When the event that generates the right to collect the income takes place between the 1st day of January of the year 2015 and the 31st day of December of the year 2029, the tax so charged shall not exceed 5 percent of the gross amount of the aforementioned payments. If the event that determines the collection thereof occurs subsequent to the 1st day of January of the year 2030, inclusive, the tax so charged shall not exceed 10 percent of the gross amount of the payments.
(3) Paragraph (2) of this Article shall apply likewise to other payments collected subsequent to the 31st day of December of the year 2014 when:
- (a) In the case of Germany:
- (i) these are generated by way of incentive payments non-integrated into the taxable income, derived from employment in that State, and that are tax deductible or that for some other reason have been included in an incentive-based scheme by the State, and
- (ii) the payments have been made during a period that exceeds 12 years.
- The previous provision shall not be applicable where, due to the emigration of the recipient, the incentive has been reimbursed to the State.
- (b) In the case of Spain, these are based on payments made, which are not included in taxable income in that State, or that are tax deductible, and that have been carried out for a period of more than 12 years.
(4) Notwithstanding what is set forth in paragraph (1) of this Article, recurring and non-recurring payments made by either of the Contracting States, a political subdivision or local entity thereof, to a resident of the other Contracting State in respect for political persecution, or as a consequence of armed conflicts or acts of terrorism (comprising fees), shall only be liable to taxation in the first-mentioned State.
(5) The term "annuity" shall be understood as a specific amount payable regularly on predetermined dates, with lifetime tenures or during a specific or determinable time period, pursuant to an obligation of making payments in fees for an adequate monetary benefit, or susceptible to valuation in money.