Foreign pension tax in the Netherlands

Do you pay tax in the Netherlands on a foreign pension?

Yes. As a Dutch tax resident, you report a pension from abroad as part of your worldwide income. That includes an employer pension built up abroad. It also includes a foreign state pension and a personal pension or annuity from another country. Did you arrive this year? Then you report the pension from your arrival date.

This page covers one direction: you live in the Netherlands and receive that foreign pension. Do you live abroad and receive a Dutch pension instead? Then the rules point the other way. Check the Verdragsstaten niet-ingezetenen overview on belastingdienst.nl for that direction.

Say you worked for a German employer for 12 years. You then moved to the Netherlands. You're now retired here, and you receive a German company pension (bedrijfspensioen) of €14,000 a year. You also receive your Dutch AOW state pension. This example shows exactly how the Netherlands taxes your pension.

Which box does your foreign pension fall into, Box 1 or Box 3?

It depends on how you built up the pension, not on which country pays it. A portion built with tax-deductible premiums or through an employer scheme works exactly like a Dutch pension. It's taxed as income in Box 1 when it's paid out. A portion built with premiums the scheme never let you deduct works differently. We call this a saldolijfrente. The payments themselves aren't taxed again as income. Instead, the pension's value counts as a Box 3 asset. Could you deduct the premiums but never did? Then the pension stays in Box 1. The saldomethode then taxes only the part above what you paid in premiums.

Your German employer built your bedrijfspensioen through payroll deductions. That works exactly like a Dutch employer pension: Box 1, on payout. Building up a pension yourself? Our annuities guide explains the options.

Which country has the right to tax your pension, the Netherlands or the other country?

The tax treaty with the source country decides that. There's no single general rule. Most bilateral treaties give the Netherlands the taxing right once you live here, but pension articles vary. Some treaties give the source country that right instead. A government pension or a lump-sum payout are common examples.

We work through Germany below. It's one of the source countries we see most often.

Where is a German pension taxed if you live in the Netherlands?

Usually, you pay the full amount in the Netherlands. Germany only taxes your pension in specific cases. The table below shows exactly when.

Your €14,000 bedrijfspensioen stays under the €15,000 threshold on its own. Add a German wettelijk pensioen (state pension) or lijfrente-uitkering (annuity payment). Together they could cross €15,000. Stay under it and Germany doesn't tax your pension at all. The Netherlands then taxes the full amount. A German government pension usually stays taxable in Germany instead, unless you hold Dutch nationality. The table below shows this.

How does the double-tax relief work if Germany also taxes your pension?

The Netherlands gives you relief so you don't pay twice. It's called the aftrek voorkoming dubbele belasting. It applies whenever both countries have a right to tax the same pension. The relief is simple in principle. Take your foreign pension income as a share of your total Box 1 income. Multiply that share by the tax you owe. That gives you the relief for that year. Can't use all the relief in one year? The doorschuifregeling carries the unused part to a later year automatically. It applies to anyone who can't offset the relief in full at once. How much carries forward depends on your pension scheme and treaty.

Your €14,000 German bedrijfspensioen stays under the €15,000 threshold. So in this example, Germany doesn't tax it at all, and there's nothing to offset. Picture a bigger pension instead, say €20,000 combined. Germany could then tax part of that amount. You'd apply the relief above to the Dutch tax on it. Your advisor works out the exact euro figure. That figure depends on your full Box 1 income and that year's tax brackets.

Do you pay Dutch social insurance premiums on a foreign pension too?

Usually, yes. Living in the Netherlands, you generally owe premies volksverzekeringen (national insurance contributions) on a foreign pension too. That covers AOW, Anw and Wlz. Anw covers surviving dependants and Wlz covers long term care. You also owe the Zvw contribution, on top of income tax.

A few exemption routes exist:

• Did you already receive a German pension before 1 May 2010 and work across the border? Then you may keep paying German premiums instead. Do you also receive Dutch AOW? Then that route closes.
• Have you reached the AOW age? Then you stop paying the AOW premium.
• Do you receive only a German pension and hold German statutory health insurance? Then you may owe no Dutch Wlz and Zvw contributions at all.

The Belastingdienst lists these routes on its page about German pensions.

Do you leave the Netherlands later? Then you pay these premiums up to your emigration date. After that you are usually no longer insured, unless you keep Dutch income and meet the conditions.

What should you do next?

Report your foreign pension as foreign income in your tax return. Use the field called 'Pensioen en andere uitkeringen'. The online return calculates the relief automatically once you fill in the figures. Arrived this year? Then you file an M return (migration return) instead of the regular one.

Two things are worth doing first. Look up your own source country in the Verdragsstaten ingezetenen overview on belastingdienst.nl. Germany's rules won't automatically match the UK's or the US's. Unsure how the numbers add up? Have an advisor check them with you before you file.

See our guide on reporting your full worldwide income, the opgaaf wereldinkomen.

How this fits your wider pension plan is on our page about pension advice.