Those who live abroad, such as in Thailand, can now have an annuity paid out without any problems. Previously this was often not possible. Together with DNB, the Ministry of Finance and the Tax and Customs Administration, the Dutch Association of Insurers has found a solution to the problems experienced by customers with an annuity when they move abroad or live abroad.
The problems arose when converting an annuity or pension capital into a regular payment. In many cases, emigrated Dutch citizens could not receive an annuity or pension payment with immediate effect because they were unable to conclude a new contract with the insurer that had to pay the payment. As a result, the annuity or pension payment was treated as a surrender under the tax law and tax was therefore due. All this could mean that the emigrated Dutch had to settle with the tax authorities in one go instead of over a series of years as is normally the case.
When surrendered, you must immediately pay tax on the entire annuity capital plus a penalty. Taking out a paying annuity is much more favorable. With this you pay tax spread over a number of years, without penalty.
A contract
The obstacles have largely been removed, now that both the accrual and payout phases are regarded as one contract with an insurer under certain conditions. This means that emigrated Dutch people can in most cases receive periodic annuity or pension payments. The solution also applies to pensions accrued at a Premium Pension Institution. Customers who want a definite answer can contact their own insurer.
The Alliance has the solution a circular captured.
Source: Dutch Association of Insurers
Dear people,
So I'm having this problem. ! At the beginning of this year, I had contact with the International Tax and Customs Administration about this. That's what they told me;
- That the benefit is seen as a surrender and therefore 52% tax is withheld
-I can reclaim too much tax the following year
– that 20% revisionary interest is then deducted 11111( something I do not understand because I am a Dutch tax resident because I live in Laos and pay about 4.000 euros in tax every year for which I get nothing in return.
-That agreements have been made with 3 foreign (???) companies to take out an annuity there that would be approved by the tax authorities. All three have been written to. 1 comment back; Company does not know the deal and has no annuity policies. Nothing has been heard from the other two.
Had contact with companies in Thailand, Laos, Belgium, France, Germany and Hong Kong. They do not know this kind of insurance. Put in a certain amount and then, for example, monthly interest. But that's just a savings product.
So I am very curious
Groet
Jan
Jan,
Can you tell which 3 companies they are?
I also suffered from this problem.
This showed that the underlying cause could not be easily identified:
– insurers do not want to make payments to foreign accounts for years (costs)
– insurers must engage an independent advisor, which you cannot find, because you live in t
abroad, and they know that that doesn't work
– insurers report that the Tax and Customs Administration does not want to cooperate because they know that with periodic
benefits can be waived
In my case, after asking a lot of questions, I found an advisor in 12lijfrente.nl who does make the effort to help you and to continue the matter.
Furthermore, I then spent 6 months applying for a tax exemption for these periodic payments, because I finally succeeded after much opposition from the tax authorities in Heerlen. I'll come back to that, because that's interesting too.
What is the situation with the payment of income tax on these benefits?
Should these be done in the Netherlands or in Thailand?
With the “Bravo” for Thailand blog of a few days ago, nothing has been said too much, as appears again with the posting of this extremely important news for many Dutch people living in Thailand.
Tribute!
And not only for people living in Thailand. I know more. I also started my annuity, which was a temporary one, which has now ended and I also had it free of income tax in the Netherlands, I was just before the ruling that assigns it to the Netherlands.
Lammert, is that a reason to adjust our tax file on this point? Or shall we wait with that given what is still open with 'Heerlen'? Or do we wait until the famous Sint Juttemis….?
In principle, the levying of income tax on an annuity payment is still the preserve of Thailand (Article 18(1) of the Treaty). Only if this distribution is charged to the profits of a company established in the Netherlands is the Netherlands authorized to levy it (Article 18(2) of the Treaty).
The District Court of Zeeland – West Brabant issued a number of rulings about three years ago that the Netherlands is authorized to levy payments on benefits paid by Aegon, among others. But that does not mean that these statements apply to all insurers. The Tax and Customs Administration will always have to demonstrate that such a payment has also been charged to the profit in that case. After all, the Treaty has not been changed by the court rulings.
In the tax returns that I do for Thai clients, I therefore do not assume in advance that the Netherlands is authorized to levy. So far I've never had any problems with that.
It is certainly time we started writing again: the tax file needs a face-lift after about three and a half years. I will contact you soon in the expectation that Thailandblog will have a completely updated tax file in a few months (but give me a moment).
Hum, Lammert, you know what I'm doing and I prefer not to start writing until the course of the year, say autumn. I now have enough pension matters on my mind as you know….. Moreover, I expect to live a bit closer to you than now….. Good work takes time…..
Quite an improvement! I understand from the circular that when the capital is released you are not yet allowed to shop with various insurers in order to possibly receive a higher payment, but that consultations are still taking place about this. Another problem, however, is that many endowment insurance policies have probably been taken out until you reach the age of 65, the age at which until recently you started receiving your AOW and pension. Because this age has been and is still being increased, the insured capital will be released at the age of 65 and must then be converted into an immediate annuity with the same insurer. It is not (yet) possible to continue saving by purchasing a banking product up to the commencement date of the state pension.
This might play out for me too, so I'd like to stay tuned.
What about a standing right, you could also deposit it in such an insurance policy, which pays this out periodically, could you get a tax exemption for that?
Dear Conimex,
The problem that this article is about and for which, it appears, a solution has been found, is of a completely different order than whether or not an exemption for the withholding of wage tax and national insurance contributions is obtained.
During the accrual phase of the annuity, people live in the Netherlands. When it comes to payment, a new contract is concluded with the insurer and the annuity policy is converted into an annuity payment.
If you still live in the Netherlands, this does not pose any problem, but if you now live outside the Netherlands, this is a “cross-border provision of services”, which involves many legal and tax complications and which insurers are not interested in. In addition, not every insurer is authorized to operate outside the Netherlands.
The result is that you are left with a nice product, namely the annuity policy, but which cannot be paid out without major tax consequences (unless, of course, it concerns an annuity policy that is not tax-facilitated due to the lack of annual scope).
And a solution has now been found for the problem of the occurrence of a “cross-border service”. Simply put, the initial agreement is extended/converted from accrual to payment phase, so without entering into a new agreement.
But why would you want to transfer your standing right to an annuity insurer? In fact, a standing right has the character of “deferred wages”. However, because the Tax Treaty between the Netherlands and Thailand contains an adequate annuity provision, the annuity payment is treaty-technically treated as an annuity payment. It may even be that (over time) it takes on the character of a pension benefit, but this must then be indicated as such in the standing right agreement.
PLEASE NOTE: you may not buy off a standing right, just like an annuity payment. In that case you act in violation of Article 18, paragraph 3, of the Treaty and it is taxed at 52% income tax, plus 20% revisionary interest.
Namely, the Convention defines annuity as: “a fixed sum, payable periodically at fixed times, either during one's life or during a fixed or determinable period of time.”
And if you now buy off your standing right and transfer it to an annuity insurer, you very quickly run the risk that this will be regarded as a “surrender”. I would not dare to take that risk, while it also serves no purpose.
Lammert de Haan, tax specialist.