Corporate Pensions: Pay-Out Abroad

  • A) Pension Claim In Holland But Living Abroad

    It often occurs that employees have acquired a Dutch corporate pension claims and afterwards retire in another country. This has no impact on their claim as they remain the sole owner of their own pension claim.

    The only extra aspect is the pay-out aspect. In international law the country where the participant resides will in general tax the Global Income. Due to the pay-out from The Netherlands, The Netherlands will in general also tax At Source.

    Thus in such a situation there will in general be the aspect of Double Taxation. Which might be mitigated or even prevented by Double Tax Treaties.

  • B) Transfer Of Value Often Not Allowed

    One option might be to transfer the Dutch corporate pension claim to another corporate pension claim in the country in which the participant will retire. This is in general not really an option as it is prevented by rigid Dutch regulations.

  • C) Dutch Pay-Out Not Flexible

    In The Netherlands there is no real pay-out flexibility. Lump Sum and Flexi Draw Down are not (yet) allowed by law.

  • D) Dutch Tax Exemption For Pension/Annuity

    If the home country taxes all Global Income like pensions and if The Netherlands will also tax At Source, it is relevant to see to what extend Double Tax Treaties can prevent or mitigate double taxation.

    The Dutch Tax Authority has specific forms which can be used to request exemption from Dutch withholding tax. Please not that such an exemption can only be requested if there is an existing Dutch pension pay-out claim. Also relevant that it can only work towards the future and thus has no backservice.

  • E) US Expats & Dutch Pension Pay-Out: No Alternative DC Quote

    US expats often participate in Dutch corporate pension plans. Which is understandable if it is a fine plan with low costs, fine risk coverage and a (very) substantial tax benefit.

    But mind you, due to the US legislation there is currently no Dutch insurance company willing to provide a pay-out quote of a DC pension capital for a US resident if the capital has not been acquired at that very insurance company.

    In that case, you would only have the quote from the then existing insurance company, which might easily inflate costs and lower the lifelong annual pay-out!

    (The alternative being a transfer of value from The Netherlands to a US corporate pension claim is also 'not that easy' to implement.)