SVG in HTML5 – when is XML declaration `<?xml version="1.0" encoding="UTF-8"?>` needed?

When using SVG within HTML5: Is the XML declaration <?xml version="1.0" encoding="UTF-8"?> needed with SVG

as images via <img> or
as CSS background-images?

This is slightly related to “Are SVG parameters such as 'xmlns' and 'version' needed”. The namespaces issues are clarified as necessary by the two answers and the MDN Namespace crash course.

But SVG 1.1 doesn't include statement on necessity of XML declaration or when it could be left out?

Example without declaration:

<svg xmlns="http://www.w3.org/2000/svg" width="200" height="200" viewBox="0 0 200 200">
  <circle id="circle--red" cx="30" cy="30" r="30" fill="#f00"/>
</svg>

Update 2016-07-04: Clarified that question is about XML declaration. Thanks @Martin Honnen! Update 2017-10-24: Changed to “UTF-8“ uppercase and SVGO optimized attribute order.

Solution

For HTML5, the correct DOCTYPE declaration is

<!DOCTYPE html>

It is needed to specify full standards mode to the browser.

What you've shown,

<?xml version="1.0" encoding="utf-8"?>

is an XML declaration. It is optional for XML 1.0 and required for XML 1.1, but

XML 1.1 isn't in widespread use.
version="1.0" and encoding="utf-8" are the defaults anyway.

Use an XML declaration in HTML5 when you wish to specify a different encoding, especially when the file might be consumed not just by browsers but also by XML processors.

For more information see HTML5: A vocabulary and associated APIs for HTML and XHTML.

Note regarding internal SVG (thanks, @Quentin): SVG embedded within an HTML5 document should not have an independent XML declaration. Only one XML declaration is allowed in well-formed XML, and it must be at the top, if anywhere. See this answer for further details regarding XML declaration placement requirements.

Note regarding external SVG (thanks, @Kaiido): SVG referenced via HTML5 img or CSS background-images must have its own XML declaration and should use the following DOCTYPE declaration:

<!DOCTYPE svg PUBLIC "-//W3C//DTD SVG 1.1//EN"
          "http://www.w3.org/Graphics/SVG/1.1/DTD/svg11.dtd">

Note regarding external SVG (update) (thanks, @user314159):

Per 1.3. SVG namespace and DTD of the Scalable Vector Graphics (SVG) 2 W3C Working Draft 09 July 2015:

A DTD is not provided in this specification, as the use of DTDs for validating documents is known to be problematic. In particular, DTDs do not handle namespaces gracefully and the range of constraints they can express is limited. It is recommended that authors do not include a DOCTYPE declaration in SVG documents.

[Emphasis added.]

Update (per SVG 2 W3C Editor’s Draft 08 March 2023, thanks @mhansen): The recommendation that authors do not include a DOCTYPE declaration in SVG documents has been removed.