Pensions in the Netherlands

19 February 2018

As of 1 April 2017 new legislation regarding pensions in the Netherlands came into force. Because of this new legislation, it is no longer possible to further build up pensions via your own company (bv).

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Written by:
Jeroen Geers Manager Tax Advisory
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The new laws provide you with three options:

  1. You can leave your accrued pension in your bv and have the pensions paid out to you after you reach the pensionable age. It is not possible to further build up the accrued pension.
  2. You can switch to a sort of “savings account” that will pay out in 20 years after you reach the pensionable age.
  3. You can choose to surrender the accrued pension. The entire accrued capital will then be paid out to you (lump sum). In the years 2017-2019 this lump sum will be taxed with a considerable discount.

These three possibilities are also open to non-resident individuals, however it is the question wether or not this is benificial as the local foreign legislation and the tax treaties provide additional difficulties in calculating the total taxation.

If you are a resident of Belgium for example and you choose for the Lump sum, the total taxation is not just depending on the Dutch legislation, but also on the Belgian legislation and the tax treaty between the Netherlands and Belgium. At the moment, it is not clear what the taxable amount of the Lump sum in Belgium would be and whether or not they take into account the discounts under the Dutch legislation. In cases where in the Netherlands you would choose for option 1, you might be better of choosing option 2 or 3 when you are a non-resident for example. The Dutch Tax Authorities will meet with the Belgian Tax Authorities soon to inform about the fiscal treatment of the pensions and the lump sum in Belgium. We will keep you posted.

The aforementioned problems do not just apply to non-residents living in Belgium, but other countries as well. So, if you are a non-resident individual and you have a pension in a company that is resided in the Netherlands, the fiscal treatment of the pension is depening on three factors:

  1. The Dutch legislation, under which you have the three options mentioned above.
  2. The tax treaty between the Netherlands and the state in which the individual is a resident.
  3. The local legislation in the country of which the individual is a resident.

The new legislation in the Netherlands proves to be very complex in national situations alone. The local legislation and tax treaties are likely to further complicate the issue.

Would you like assistance in fiscal treatment of your pension? Our specialist will gladly assist you!

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