German companies are incentivised to offer employees early retirement by setting up schemes whereby employees contribute gross into a savings plan which is taxed normally when paid out and contributes about half annual gross income. Employers then make up the resulting net to maximally 85% of the employees pre retirement net income. The Employers contribution is subject to minimal taxation. Effectively the result is that an employee can retire up to 3 years prior to their normal retirement age and the employer is paying only about 25% of the employees previous cost.
I have asked HMRC to honour the terms of this scheme. Their initial response, if I am tax resident in the UK, however is to tax the employers contribution at the full UK rate. This effectively results in me being double taxed because these schemes are not specifically covered in the Double Taxation Agreement between the UK and Germany.
Does anyone have any experience of these schemes and of course a rather more positive outcome of any submission made to HMRC.
Thanks
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