Upon migration, the Netherlands can recover contributions deducted in respect of annuity and pension entitlements


Upon migration, the Netherlands can recover contributions deducted in respect of annuity and pension entitlements

The Supreme Court rules that recovering the provisionally granted deduction of pension and annuity contributions is not contrary to good faith in treaty interpretation, apart from the period of 1 January 2001 up to 16 July 2009.

26 july 2017

Dutch version

Facts and circumstances

An entrepreneur transferred its business to a private limited liability company and stipulated a specific annuity. In addition, he accrued a self-administered pension. The contributions paid for the annuity and pension accrual were deductible for tax purposes. The taxpayer immigrated to France on 31 December 2014. On the back of this he was imposed a protective income tax assessment, in which the amounts deducted earlier on were included as negative expenditures for an income scheme.

Migration levy

Under the tax treaty, France has been assigned the power to tax both the annuity and pension benefits. By imposing a protective assessment upon migration for income schemes that were granted earlier, the Netherlands recovers the related deductions. This raises the question whether the Netherlands acts contrary to good faith in treaty interpretation. According to the Supreme Court this is not the case. The Netherlands does not tax annuity or pension entitlements allocated to France, it merely recovers a provisionally granted deduction. The Supreme Court does add that the period in which the contributions were paid should be taken into account. In this respect a distinction should be made between the annuity and the pension accrual.


The value of annuity entitlements was subject to taxation upon migration in the period between 1 January 2001 (when the Income Tax Act 2001 came into force) and 16 July 2009. The Supreme Court ruled earlier that this is contrary to good faith in treaty interpretation. A protective assessment relating to contributions paid in that period is subject to compartmentalisation. As the contributions deducted were not provisional in the related period, it was not permitted to recover them through a protective assessment. The same applies to annuity contributions paid before 1 January 1992. At that time the law did not yet provide for the possibility to recover deducted personal obligations if certain conditions were not complied with.

The pension contributions, too, are subject to compartmentalisation. Although in this case the amounts deducted earlier on can only taxed as negative expenditure if the contributions were paid after 15 July 2009.


The Supreme Court’s ruling is the first time it provides an answer to a request for a preliminary ruling by a lower court. This is unique. The preliminary character assumes that more taxpayers have been faced with such a protective assessment. All these taxpayers have more clarity now.

Still, the effect of the ruling is quite unsatisfactory. Considering the negative income scheme to constitute the recovery of a provisional benefit would appear to be a legally enforceable ruling. However, in practice this could lead to a heavier tax burden in cross-border relationships, particularly if the immigration country taxes the annuity and pension entitlements. In a fully Dutch situation the Netherlands would have taxed the entitlements as well but then the contributions would have been deductible. Now, the contributions can no longer be deducted while the entitlements will possibly be taxed (by France). Whether this is permitted in the European internal market was not discussed.

Source: Supreme Court 14 July 2017, 17/01256, ECLI:NL:HR:2017:1324

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