Pension under own management – phasing out in international situations

A director/main shareholder who has accumulated a pension, under his own management, in his Dutch limited company may convert it to or redeem it for an ODV (old-age provision), according to a new law in 2017. If the pensioner currently lives abroad, there are another few specific focus areas.

You are living abroad

If you are a pensioner and live abroad, a few other issues must also be assessed.

1. Was a preservation assessment imposed upon departure?

   Firstly, it is important to establish whether a preservation assessment was imposed when you left the Netherlands. If this is the case, and this assessment was imposed less than 10 years ago, there has to be an evaluation of whether this assessment could be recoverable if you now convert or redeem your pension. There is also the question of whether the preservation assessment was lawfully imposed? Legally speaking, the assessments prior to 2009 were incorrect.

2. How will your country of residence deal with any redemption value

   Another important point is how the country of residence would deal with any redemption value. In the event of redemption, the Netherlands would provide a discount on salary tax but if the country of residence taxes the surrender value in full, there will be no advantage. This requires a specific assessment of the tax treaty between the Netherlands and the country of residence and how the tax rules are shared between the two countries when it comes to pension payments and redemption values.

3. Converting pension to old-age provision (ODV)

Another important option is that of converting the pension under your own management to an ODV. The pension article from the tax treaty more than likely applies, but that is not certain. If this is the case, the tax treaty needs to be fully assessed. In terms of Germany and Belgium, depending on the rate of annual pension payments, the Netherlands sometimes has a right to deduct tax on this money.

If you end up in a situation where you have accumulated a pension under your own management in the Netherlands, and now live abroad, a specific analysis of your situation is extremely important. We would like to help with this. Contact one of our international advisers via the contact form below.