The change in legislation in 2022 on the Dutch pension has created considerable uncertainty for many retirees. What does this mean for you?

Uncertainty around pension legislation

With the introduction of the 21 January 2022 law, several tax provisions were tightened, including the exemption for pensions accrued before 2004. Previously, these pensions were exempt under Article 39, §2, 2° CIR 1992. However, the new law stipulated that all pension payments were taxable, regardless of the method of accrual. This caused unrest and concern among many pensioners who were suddenly faced with additional tax liabilities.

Retroactive entry into force and legal consequences

One of the most controversial aspects of the new law was its retroactive effect from the 2021 income year. This meant that pension benefits received from 1 January 2021 suddenly became taxable. This change was met with considerable opposition and led to an application for annulment in the Constitutional Court. In a judgment dated 14 December 2023 (GwH 14 December 2023, 170/2023), the Court ruled that the retroactive effect of the law was not justified and therefore annulled this legislative provision. As a result, the amended law will come into force only from 7 February 2022, 10 days after its publication.

Exemption for pension payments before 7 February 2022

Specifically, this means that pension payments made before 7 February 2022 will still fall under the old exemption rules. This provides an opportunity for taxpayers to claim exemption for foreign pension benefits accrued in their individual and final benefit between 1 January 2021 and 6 February 2022. This exemption can be claimed via an objection or an ex officio exemption request.

Tax advice on tax facilitation and double taxation

The amended legislation only applies if the pension was not tax-facilitated while it was accrued. This means that the pension accrual was taxable at the time, as is often the case for Belgian cross-border workers who worked in the Netherlands. The Constitutional Court recognises that double taxation should not occur in the case of non-facilitated pension accrual. This was confirmed in the parliamentary preparation of the legislative amendment, so the Court did not annul the legislative provision in its entirety but only formulated a reservation. A tax lawyer will give you more tax advice on your specific situation.

Definitions and burden of proof of tax facilitation

However, what constitutes 'tax facilitation' remains unclear. The Supreme Court stated that this should be assessed on the basis of Belgian tax law. If the premiums for pension accrual were considered a taxable benefit in kind at the time, the later benefits cannot be taxed again as deferred professional income. Although the Constitutional Court seems to accept this, it still referred to tax facilitation in the Netherlands, again creating uncertainty. This places a heavy burden of proof on taxpayers, who have to prove that their pension accrual decades ago was not tax-facilitated, which is especially problematic for pensions accrued before 2004.

Advice from your tax lawyer

In short, the term 'tax facilitation' is not legally defined and its application by the Constitutional Court and the Supreme Court is ambiguous. The burden of proof goes unreasonably far back in time, which does not enhance legal certainty. However, it is clear that the Court recognises that supplementary pensions may only be taxed once, either at the time of accrual or at the time of payment.

Tax and financial advice for you personally

If you would like additional information or have enjoyed a pension benefit between 1 January 2021 and 6 February 2022 that may qualify for exemption in Belgium, please contact our office. Tax lawyer Joke Brabants (This email address is being protected from spambots. You need JavaScript enabled to view it.) or Marian vanden Broeck (This email address is being protected from spambots. You need JavaScript enabled to view it.) will be happy to assist you with expert tax and financial advice.