Reader Submission: Annuity when moving to Thailand
Dear readers,
Anyone who has an annuity policy and moves to Thailand (or another foreign country) should take into account that the insurer may not offer an immediate annuity (periodic payment) at the end of the contract.
In the most extreme case, this means that you only have the option of having your annuity paid out in one payment, with the result that you have to pay income tax on the entire amount in one go and a penalty, the so-called revisionary interest, of 20%. . Because it usually involves a substantial amount, you will soon fall into the highest tax rate and you may only have 30% of your money left.
The reason for insurers not wanting to provide immediate annuity is that there is a new contract to which the law of the country where you live may apply. They don't want that.
There is a solution and that is that you agree with your insurer before your annuity expires that you want to continue your current agreement as an immediate annuity afterwards. In that case there will not be a new contract, but a continuation of the existing contract, and Dutch law will continue to apply.
The disadvantage is that you have no freedom to go shopping with your annuity that has become available (you can only agree this with your current insurer), but that disadvantage is infinitely smaller than the disadvantage of paying out your annuity in one go.
If you want to read more about the background: www.aegon.nl/business/adfis-news/kifid-over-aankoop-lijfrente-na-emigration
Submitted by François
Shopping if you live in Thailand is no longer possible. Only Flexgarant will then still provide insurance, but will soon stop doing so. So it becomes either your own insurer or your own bank. Otherwise it will be a lump sum payment. The tax authorities are not aware of this problem and simply apply the levy and revisionary interest (max. 52% + 20%). So you have 28% of your money left over.
Can you do something about that?
No.
The paid fine and income tax are deductible or reclaimable the following year via a tax return form.
Curious where you can find the substantiation of that information, Bob. In my opinion, requesting a refund from IB is only possible if, on closer inspection, it appears that you should not have been subject to the 52% rate. Then you can nibble off 10 or 20 percent. I can't find anything about reclaiming the fine. Do you have a website or document that says more about this?
my accountant has arranged this through an ib declaration and it is not a fine indeed but revision interest.
Bob, can you explain further? I surrendered 2 annuity policies before I left for Thailand. I didn't see anything in monthly payouts until I turned 65 (2020) over a longer period of years. In addition, it turned out that part of the accrued amount had been accrued, if I am correct, after 2006. Then new legislation came into effect, meaning that the part after 2006 would only become available monthly from 2025. That made it even more unattractive to me. I have reported my redemption to the tax authorities. And now awaits further settlement.
fine? It's not a fine, it's revisionary interest. Are you sure that revisionary interest is considered deductible withholding tax?
With averaging over a period of 3 years, a refund is possible if the income in 1 of those years was significantly higher than the other 2.