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Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.
Before I can fully address the position I need to know the overseas country involved.
If you live in the UK for over 183 days in any one tax year you are subject to UK taxation on your world wide income. Thus the approach by the pensions administrator of the international organisation appears correct. There is a possibility of double taxation which cannot be relieved hence the preamble to my response.
I am so sorry to have to rain on your parade.
I have already advised that these pensions are taxable income in the UK for IT. However, the Double Taxation Convention, and I have looked at the provisions, between the UK and Luxembourg precludes the same income stream being taxed in both jurisdiction. Thus the tax deducted in the Duchy will be allowed as a tax credit against the UK liability so you do not get taxed twice as might have happened had there been no treaty. The Convention does not, however, protect you from differences in rates of taxation.
I do hope that I have shed some light on the position.
I would be delighted to speak with you by telephone, but it simply is not feasible. I am responding to you from a time zone 6 hours ahead of the UK so the cost would be prohibitive, sorry.
Your are not taxed in both, it is a misnomer as the Double Taxation Conventions ease the load considerably.
When I left one of my employments we had an excellent briefing by Wills Caroon on what to do in the future. Although the rules have now changed I did as advised, refused the pension scheme and funded my own. When all the chips were down my post event appraisal showed I was 5K pa better off not participating in the occupational pension scheme.
Thank you for your support. I have a Thai wife and live there quite a bit!