End of the double taxation of frontier workers’ pensions
Residents from Belgium who have worked in the Netherlands usually also receive a supplementary pension for those years.
In accordance with the double tax convention concluded between Belgium and the Netherlands, pensions are in principle always taxable in the State of residence. The Dutch supplementary pensions of Belgian frontier workers have therefore been taxed in Belgium for years, just like the Belgian pensions.
At the end of 2017, the Netherlands nevertheless indicated that the supplementary pensions would now also be taxed in the Netherlands. The Netherlands relied for this on a few court orders whereby it was decided that the supplementary pension of some frontier workers would ultimately not be taxable in Belgium. Concretely, this resulted in a salary withdrawal by the Netherlands for about 1,500 people.
According to the Belgian tax authorities, however, the judgements could not be generalized and the Dutch supplementary pensions remained in principle a Belgian tax matter.
The consequence of the sudden change of course in the Netherlands was that the supplementary pensions of frontier workers were taxed in both countries.
Minister Van Overtveldt insisted on a quick solution. Intense consultation between both tax authorities has now led to an agreement. The Netherlands recognizes that there can be no question of double taxation.
The Netherlands therefore waives the taxation of these supplementary pensions if the Belgian administration can demonstrate that these pensions have already been taxed in Belgium. Dutch supplementary pensions remain taxable in Belgium for Belgian frontier workers. If supplementary pensions are not taxed in Belgium, they will be taxed in the Netherlands. This avoids double taxation but also double non-taxation.
Taxpayers will not have to take any action themselves to avoid this double taxation. The tax authorities will provide each other with the necessary information so that those involved are spared from administrative nuisance. The salary withdrawal by the Netherlands will therefore automatically be corrected.
This agreement between Belgium and the Netherlands will be signed on 5 March by the Dutch State Secretary for Finance, Menno Snel and the Minister of Finance, Johan Van Overtveldt.
The Minister of Finance, Mister Johan Van Overtveldt, says: “I asked the administration to act quickly to resolve this unfair situation and I am satisfied that we have now reached a solution. It cannot be accepted that the pensions of frontier workers would suddenly be taxed twice. I wish to thank my Dutch colleagues for their constructive attitude.”