Dutch-German Tax Treating Hitting Pensioners

Dutch residents who have worked in Germany and are now pensioners are to receive a lower income resulting from a new tax treaty which was recently introduced.

It works pretty much the same as the United Kingdom in that when a person works legally in the country they get a state pension. Now the Dutch pensioners were building up “Altesrente,” which is the German version of the state pension. Before now this pension wasn't taxed and if it was it was a nominal amount. The new treaty is taxing up to fifty two percent, which is a staggering drop in income for the Dutch pensioners.

Losing Income

The previous State Secretary of Finance did promise that the new calculations would ensure that the Dutch pensioners didn't lose income when it came to their German pensions, this was the promise made in 2014.

It is believed that the treaty wasn't focused on the Dutch people losing out on their pensions. It was the Netherlands that signed a treaty with Germany to reduce the risk of wealthy pensioners moving to Germany. This may be due to the fact that tax is only payable on fifteen thousand Euros per year in the country of residence with income over that being taxed in the country where the pension was built up.

The problem is that it has reversed the roles affecting those who are receiving German pensions to be suffering as a result.

Safeguard your Pension

It is imperative whether you are living in Germany, the Netherlands, United Kingdom or Dubai that you safeguard your pension. It is imperative that you take the time to speak to a professional and get the advice you need to protect and grow your pension with the least amount of tax payable.

For those who have built up a pension in the United Kingdom and are thinking of retiring abroad, they are welcome to discuss QROPS with their financial advisors to see if this is the most financially beneficial route for them to take, which enables them to move their pension to their new country of residence and use it with limited tax implications after five years.