Discussion:International Treaty Taxation of Government Pensions

Treaty taxation of government pensions paid out of public funds varies from treaty to treaty. However, Article 19(2) of the Model US Treaty of 1996 basically provides for taxation of a government pension (other than Social Security benefits) in the country from which the payments were made unless the recipient is a resident and national/citizen of the other country, in which case the governmental pension would be taxed in the country of residence.

For governmental pensions, the UK/US treaty follows the basic outline of the Model US Treaty of 1996. In the case of government pensions (other than Social Security) received from the United Kingdom, a US green card holder receiving such a pension from the United Kingdom would have his pension taxed only in the United Kingdom. However a resident and citizen of the United States would have his UK government pension taxed only in the United States.