On 31 January 2008, the Dutch tax authorities published a new decision relating to the international aspects of occupational pensions. The new position also has an effect on workers who are temporarily assigned to The Netherlands from another member state of the European Union and who continue to participate in their foreign occupational pension scheme during that period.

Whilst employed in The Netherlands, employees are as a rule subject to Dutch income tax. Generally, foreign occupational pension schemes do not meet the criteria set by Dutch law. As a result, employer contributions to the foreign scheme qualify as taxable income in The Netherlands and employee contributions are not eligible for relief there.

For some years, it has been possible to submit the foreign pension scheme to the Dutch tax authorities for approval (so-called “corresponding approval”). If approved, the foreign scheme could (for a maximum of five years) be treated the same for tax purposes in The Netherlands as if it were a Dutch pension scheme (employer contributions are exempt and employee contributions qualify for relief).

In practice, however, such approval entails a fairly arduous bureaucratic procedure, including an assessment of the terms of foreign pension scheme. The 31 January decision now makes the practical aspects of the application procedure much simpler. A substantive assessment of the pension scheme is dispensed with, and the Dutch tax benefits have also been reworked.

However, taking into account the specific provisions of the Belgian-Dutch double taxation treaty on pension income, it should be investigated whether such “corresponding approval” does not lead to any adverse income tax consequences upon retirement.