Update – Dutch and Belgian tax authorities agree on taxation of Dutch pension schemes


In our newsflash of 16 February 2018 we referred to the notifications that have been sent by the Dutch tax authorities (since the end of 2017) to pensioners who are tax residents of Belgium and who receive EUR 25,000 or more per annum under a Dutch pension scheme. In these letters, the Dutch tax authorities stated that, the Dutch wage withholding tax exemption over such pension benefits is withdrawn effective as from 1 January 2018. This position of the Dutch tax authorities is based on the outcome of various Belgian individual lawsuits in which it was determined that certain of these pension benefits may not be taxed in Belgium, notably when accrued externally through a Dutch pension institution before 1 January 2004 (i.e. effective date of the Belgian Supplementary Pensions Act).

The Belgian tax authorities have pointed out that (notwithstanding the individual court decisions – which are not general in nature), on the basis of the Belgian tax legislation, the Dutch benefits are still being subject to taxation in Belgium. Based on the general principle of the pension article in the Belgian-Dutch double tax treaty, Belgium (being the home country of the pensioners) has indeed got international taxation power over these pensions. However, due to the fact that the Dutch wage withholding tax exemptions were withdrawn, the Dutch pension institutions had to withhold Dutch taxes. In practice, this resulted in potential double taxation and uncertainty for the individual taxpayers involved.

The Belgian and the Dutch tax authorities have now aligned their positions and came to an agreement on the way forward (which will be signed on 5 March 2018). The Dutch tax authorities have agreed to the fact that double taxation must be avoided. As Belgium has the taxation power, the Dutch tax authorities will not apply taxation on these pension benefits on the condition that the Belgian tax authorities can demonstrate that these are taxed in Belgium.  If there is no taxation in Belgium, taxation will be imposed in The Netherlands (as to avoid double non-taxation).

No action is required from the individual taxpayers. The Belgian and the Dutch tax administrations will exchange the relevant information directly. Also, the Dutch wage withholding tax (where applied wrongfully) will be rectified automatically.