Reader question: What exactly is the situation with the deduction of payroll tax and ZVW from my pension?
Dear readers,
On the site I found a lot of interesting information about emigrating to Thailand. Very educational and useful. The information about deductions from the pension benefit if you live in Thailand is still a bit unclear/confusing to me.
I intend to travel to Thailand as soon as possible and settle there. I have recently taken 'early retirement'. That means deregistering from the Netherlands (more convenient to do this in 2021). That also means I can't keep my health insurance.
Although it is not yet clear which visas can be issued in due course, I suspect that it will be a 'non-immigrant O'. I meet all age and income requirements. I will rent a house there, etc. I will have my full pension transferred to Thailand as soon as I have a Thai bank account.
• What does this mean for the deductions from my pension benefit?
• Does the type of visa matter? I suspect not, but I'd like to hear other people's experiences.
• Can I ask the pension provider to no longer deduct the income-related ZVW premium?
• Can I ask this pension provider not to withhold wage tax and national insurance contributions? After all, I am no longer liable to pay tax for these pensions, am I?
• Which documents do I have to submit to the pension provider to stop these deductions?
I now and/or soon have three pensions:
- Company pension
- ABP pension – Does it matter that I (not a 'real') civil servant was employed by the municipality over central government? I have been employed for a number of years at the University of Amsterdam and a few years at the SVB (in IT, and I have no understanding of AOW……)
- AOW (in the future)
I'd love to hear your experiences!
Regards,
John
John, if you emigrate from the Netherlands and start living or staying in Thailand, the national insurance obligation will stop. This means no more paying premiums, but also no accrual for the AOW during the years in Thailand, no rights for surviving relatives for the ANW, no more rights for the WLZ and possibly a waiting period when returning to the Netherlands. No entitlement to WLZ equals no entitlement to the Healthcare Insurance Act and so you are not insured or you have to look for something else in good time.
Now pensions. I can advise you to read the treaty for the prevention of double taxation, which you can find atwetten.nl. Articles 18 and 19.
Occupational pension, other than state pension, is allocated to TH under the treaty.
State pension has been allocated to NL under the treaty. Please note: ABP pays both state and company pensions, but I think you know how your pension qualifies.
AOW is taxable in both countries.
If you want an exemption from wage tax and national insurance contributions, you must ask the foreign tax authorities in Heerlen. Employers prefer to be on the safe side before they stop withholding. If you deregister from NL, the tax authorities will automatically receive a message, so you are known there. Request the form online and fill it out.
That exemption has been a hot topic in this blog for years because the tax authorities have been asking for more than what they are entitled to for 4 years. I can advise you to read this blog on this subject (the search function is at the top left) and read in particular the articles by Lammert de Haan, tax adviser.
AOW is something for the future, you say. Whether you will have to transfer that from month to month or after the end of the year remains to be seen by then because then there may be a new tax treaty.
John, applying for an exemption is a piece of cake if you follow the proper procedures. Proof from the Thai tax authorities that you are subject to tax here, a ro 22 form and a statement that you live here are sufficient.
My application was approved within 2 months after application, so it is not that difficult. Engaging Lammert de Haan saves you some headaches.
does the exemption also apply to the AOW?
hi han, where can i find that mister lammert de haan, i've been to 3 tax offices but they can't help me anywhere, or pay 50.000 baht first then i'm taxable in thailand this was my story. gr theo.
Hello Theo,
See my response to John's questions.
I understand that you are having problems filing a declaration for the PIT. In that respect there is nothing new under the (Thai) sun. If desired, I will prepare your tax return (form PND91).
Regards,
Lammert de Haan.
Healthcare Insurance Act: shorturl.at/bhGP8
The 5,45-6,7% of your gross income is in addition to the directly paid health insurance premium of approximately € 110 x 12 months + € 385 max deductible. The rest, up to approximately € 5800 pp/year, is paid out of the Great Communal Pot, also known as the National Treasury. So if you decide to leave NL, you will have to arrange health insurance yourself, something that does not get easier with increasing age and becomes completely dramatic with really older + care dependent in Thailand. This is a reason for me to stay in NLe health insurance anyway.
Apart from all legal provisions that can be found out on this site, your personal situation is very important to me.
For example, despite the law, I did not succeed in transferring the tax on my state pension to Thailand. The Tax and Customs Administration simply states that they have the right to make that choice, and the juice is not worth the cabbage to me.
I also think it is important to look at your personal situation: do you have savings, or do you need your pension every month. The Thai Tax Act says that if you don't bring your income to Thailand in the year you get it, but e.g. a year later, you don't owe any tax. So if you can have your pension (for which you can get tax exemption) paid out in NL, that's a profit.
On the other hand, if you cannot submit form RO-22 to the Tax Authorities, you will not be granted an exemption… it cost me countless objections and half a year of letters back and forth. And to get a RO-22 from your provincial tax office you need to prove 2 important facts:
– that you pay taxes in Thailand
– that you stay in Thailand for more than 180 days.
Do you have savings, and can you invest this in bonds here, for example, with a return of, for example, 5%, then you pay tax on your dividend, and you get that RO-22 without having to transfer your income.
After emigration, tax liability remains for government pensions (e.g. the AOW-ABP), for private pensions an exemption can be obtained by applying for an exemption from payroll tax.
Recent proof of tax residency must be attached to the request, after which the exemption can be granted. Because people are no longer insured in the Netherlands, there are no longer any national insurance premiums due and therefore no ZVW premiums either. If premiums have been withheld by benefit agencies after emigration, these can be reclaimed from the Tax Authorities.
Hi Marty Duyts,
I would advise you not to simply refer to an AOW benefit or an ABP pension as examples of a government pension. This constantly raises misunderstandings among readers of Thailand Blog.
Formally, an AOW benefit is not a pension within the meaning of the Pensions Act and is also not covered by Articles 18 and 19 of the Double Taxation Treaty concluded between the Netherlands and Thailand. In fact, the Treaty makes no mention of social security benefits, including an old-age pension, and is therefore taxed both in the Netherlands and, in principle, in Thailand (provided that it is paid there in the year of enjoyment).
An AOW benefit is not tax-facilitated through premium deduction and therefore differs substantially from a pension benefit. Just by living in the Netherlands and even without any income and thus paying premiums, you already accrue state pension rights
In many cases, an ABP pension is also not accrued within a government position, but within a private-law employment relationship. In addition, you may also be dealing with a so-called hybrid pension, ie accrued partly within a government position and partly within a private employment relationship.
In my consultancy practice I come across all too often that even tax lawyers, when they see the letters “ABP”, assume that it concerns a pension under public law and is therefore only taxed in the Netherlands (art. 19 of the Treaty). But often they completely miss the point.
That's why I ask for some caution.
Hi John,
So you intend to emigrate to Thailand. Many have already preceded you. A large part of them have not prepared things well, but that seems to be different with you. You would like to have a good insight in advance into the fiscal/financial consequences of such an emigration and that seems very sensible to me.
So I'll start answering your questions right away.
I read that you receive a company pension and a pension from the ABP. With regard to the latter, you indicate and I can also deduce from the employers you specified that you did not enjoy the status of a civil servant within the meaning of the Civil Servants Act.
Your employers were affiliated with the ABP as so-called B-3 institutions. This often occurs in private-law educational and healthcare institutions and in semi-government institutions such as the SVB. As of January 1, 2020, the employees of the SVB have, incidentally, obtained the status of civil servants within the meaning of the Civil Servants Act due to the abolition of the B-3 institutions.
Your occupational pension and your ABP pension can therefore be regarded as pensions under private law and, pursuant to Article 18, paragraph 1, of the Treaty for the avoidance of double taxation concluded between the Netherlands and Thailand, are only taxed in Thailand.
After emigration, the ABP will only deduct payroll tax. The national insurance contributions and the income-related Health Insurance Act contribution will be canceled because you will no longer fall within the circle of compulsory insured persons for these laws.
To prevent a loss of AOW of 2% per year that you live outside the Netherlands, you can take out voluntary insurance with the SVB.
Most pension providers act in the same way as ABP. However, if your company pension has been placed with an insurer such as AEGON or Nationale-Nederlanden, you must bear in mind that, in addition to the wage tax, the premiums and contributions mentioned will also be withheld. These institutions suffer from an appalling lack of legal knowledge. You can then enforce the waiving of these unjustified deductions by means of a notice of objection, to be submitted to the Tax and Customs Administration/Office Abroad.
Payroll tax is a different story. Although this is legally permitted, in view of a judgment of the Supreme Court at the end of the nineties of the last century and the explanatory memorandum accompanying the bill that led to the cancellation of the statutory payroll tax statement, most pension providers require a so-called Exemption statement, to be issued by the Tax and Customs Administration. However, this service only issues such a statement after you can submit a so-called tax liability statement for your country of residence, to be issued by your Thai Revenue Office (form RO22). For this you will first have to have filed a declaration in Thailand for the Personal Income Tax.
Despite the fact that I brought two cases to a successful conclusion this year at the District Court of Zeeland – West-Brabant, Breda location, and in which I demonstrated with evidence other than the declaration of tax liability in the country of residence that the relevant customers were tax residents of Thailand, the Tax and Customs Administration/Office Abroad stubbornly adhere to the requirement of being able to submit the said statement.
Incidentally, you will be refunded the incorrectly withheld wage tax and any national insurance contributions on a tax return (and then without demonstrating that you are a tax resident of Thailand!). You will also receive a refund of any wrongly withheld income-related healthcare insurance contribution upon request and to be submitted to the Tax and Customs Administration/Utrecht office.
This is different with regard to your AOW benefit to be received in due course.
Since the Treaty concluded with Thailand does not contain any provision regarding social security benefits, while a so-called residual article is also missing, national law applies to this benefit. This applies to both the Netherlands and Thailand.
The Netherlands taxes your AOW benefit as the source state and Thailand may also tax this benefit as the state of residence.
You write that you will have your entire pension payments (monthly) transferred to Thailand in due course. However, if you have an owner-occupied home in the Netherlands that you can sell with surplus value or if you otherwise have sufficient resources, then I would think about it. This applies all the more as soon as your AOW benefit starts.
Thailand taxes the income of foreign residents obtained across the border only insofar as this income is brought into Thailand in the year in which it is enjoyed. The type of visa does not play any role in this. You only have to live or stay in Thailand for 180 days according to Thai tax law or 183 days according to the Treaty. This is the so-called remittance base determination.
I regularly make a calculation of the tax consequences of such an emigration for people who intend to emigrate to whatever country. If you want to use this, please contact me via my e-mail address: [email protected].
You will then receive a calculation of the Dutch income tax and premium levies before and after emigration and of the Thai Personal Income Tax.
Good luck with your plans.
Hi John,
I have been living in Thailand since 2009, but already had a retirement visa in October 2008 for one year, which requires a trip to the Immigration office in the relevant province or district every three months to confirm the residential address. In the beginning it was somewhat unclear with regard to Dutch taxes, both with regard to occupational pensions and, in my case, from 2012, the AOW.
Recently, I have been informed of the correct guidelines in direct contacts via email and telephone with one of the inspectors of the Tax and Customs Administration Abroad. The AOW is taxed in the Netherlands, of course without social security contributions, so also without ZVW. In Thailand you have to arrange health insurance yourself. A notice of relocation to the CAK in the Netherlands is recommended.
All Company Pensions are allocated to Thailand in accordance with the treaty that exists with the Netherlands.
Over time, the tax authorities expect that proof of tax liability in Thailand can be submitted. So you will have to make contact with the Thai tax authorities yourself.
Coincidentally, my first name is the same.
Regards,
John.
Dear John,
What a nice prospect!
Have you also considered the disadvantages of emigration, including:
* as long as you have not yet reached the state pension age, you lose 2% per year in discount, you can of course compensate this with a voluntary state pension premium [for a minimum wage pension this is 2400 euros on an annual basis]
* due to all those stricter regulations surrounding banks, it is made more difficult every year for non-NL residents to maintain a Dutch bank account. After all, you don't want to keep all your savings in Thailand, because after all you will always be a guest in Thailand.
* previously mentioned, health insurance in Thailand becomes more difficult and expensive as you get older
The following is about voluntary supplementary AOW insurance. I was cut 8% on my state pension and then had to pay Euro 4 for 2.400 years (total Euro 9.600). Simple calculation showed for me at the time that the break-even point was around age 76. It was therefore decided not to pay the voluntary contribution and to accept a lower state pension. Of course, the break-even point can be different for everyone, especially due to the increased state pension age. So make a calculation whether paying the voluntary AOW premium is profitable or not.
Some additional information:
the premium is income-related:
Minimum 529 if you have no income (but be able to demonstrate what you live on) and a maximum of 5294 (income from 34.712).
Only income is taken into account, not the size of any assets.
In the case of a bank account, it is then useful to work with Transferwise, which can be seen in the EU and can be used as a bank, works quickly and is less expensive than Dutch banks and you also receive a credit card right away.
Regards Harry
Moderator: We have posted your question as a reader's question.
It will soon make you dizzy, all those pensions and taxes and deductions, but I would still like to ask a simple question that I cannot find the answer to myself:
I live exclusively on the state pension.
I have deregistered from the Netherlands and have been living in Thailand for years.
My amounts are currently:
AOW: 1245,04
Income support AOW: 25,63
Total gross: 1270
Payroll tax – 123,08
I receive net: 1147,59
My question: is there anything else I can do to get rid of payroll tax or will I have to make do with this?
Paul, if you live in TH, AOW is taxed in NL. But TH is also allowed to levy, even though your net AOW may not exceed all exemptions and the zero-% bracket.
Dear John,
If you really live in Thailand, even if this is on a temporary residence permit that is renewed annually, then your company pension is entirely allocated to Thailand for tax purposes. I recently won a tax procedure in which all kinds of statements by the tax authorities to ensure that even government pensions should not be taxed in the Netherlands were thrown out. The tax authorities are not appealing. The tax authorities have already arranged the tax returns and assessments in accordance with the court's ruling. The withholding agent has also been informed by the tax authorities not to make any deductions. The old hot potato that has been used by the tax authorities for years has now been relegated to the land of fables. Also all kinds of requirements regarding the obligation to file a Thai tax return, to send a copy thereof, proof of a Thai assessment and payment of it are just a few things that have been rejected. Because you live in Thailand, you are not insured in the Netherlands. AOW is allocated to the Netherlands. An explanation of your ABP pension has already been provided.
You can ask the Dutch tax authorities for an exemption from wage tax on that occupational pension.
you will then receive a form that the Thai inspector must fill in regarding your place of residence.
Good luck Theo
Thank you all very much for the responses.
Many questions have now been answered and contribute to the substantiation of my choice.
The choice had actually already been made. It is now more about the 'rational substantiation'.
I will ask the more privacy sensitive questions via email.
I'll report back if there are any tax issues!