Taxation of French Civil Service Pensions
Clarification within the Franco-German Tax Cooperation Framework
The German tax authorities have recently clarified how French civil service pensions are to be treated under the Franco-German Double Taxation Agreement (DTA). A consultation agreement between Germany and France now definitively specifies which types of retirement benefits are to be taxed exclusively in France. The aim is to avoid double taxation and eliminate existing legal uncertainties.
Background
Individuals residing in Germany are subject to unlimited income tax liability on their worldwide income. Pension payments from France – particularly to former civil servants, military personnel, or judges – are, under the source state principle, generally taxable in France. However, in certain cases, Germany may also tax these pensions – for instance, when the recipient holds only German citizenship.
To prevent double taxation, these pensions are exempt from taxation in Germany but are subject to the progression clause: they remain tax-free but may influence the applicable German tax rate.
New Consultation Agreement and Official Ministry of Finance Letter
On 20 March 2025, the tax authorities of both countries signed a new consultation agreement, complemented by an official letter from the German Ministry of Finance dated 19 May 2025. These documents clarify that the following French pension schemes are considered as remuneration for prior public service and are thus taxable exclusively in France, provided the relevant administrative or military criteria are met:
- Régime des pensions civiles et militaires (based on the CPCMR; paid by the “Service des retraites de l’État”, SRE)
- Caisse nationale de retraites des agents des collectivités locales (CNRACL)
- Régime de Retraite additionnelle de la Fonction publique (RAFP)
- Institution de retraite complémentaire des agents non titulaires de l’État et des collectivités publiques(IRCANTEC)
In addition, it is explicitly stated that the Caisse des dépôts et consignations (CDC), as the managing body of the above schemes, also falls under the scope of pensions taxable exclusively in France.
The Ministry’s letter confirms that these provisions apply to all open cases.
Impact on Affected Individuals
The new agreement provides legal clarity for retired French civil servants, judges, and public sector employees:
- Avoidance of double taxation – Pensions are clearly assigned to French tax law, regardless of the recipient’s place of residence.
- Progression clause maintained – Germany continues to consider the pension for rate calculation purposes, even if it remains tax-exempt.
- Clear procedure for taxpayers – The defined list of pension schemes reduces administrative uncertainty.
If you have further questions, our accountants will be happy to provide you with personal advisory. Additionally, we are available to advise you throughout France and Germany by phone and video conference. Your Franco-German tax consultancy FRADECO.
Disclaimer
Although the greatest possible care has been taken in the preparation of this newsletter, we reserve the right to make changes, errors, and omissions. The abstract legal presentation in this newsletter is no substitute for individual civil and tax law advice on a case-by-case basis. Subsequent changes to the legal framework, the views of the German or French tax authorities or case law, including with retrospective effect, are possible.
