Questions on Dutch-German double taxation convention

The Junior Finance Minister has responded to a letter on the topic of taxation of Dutch-resident recipients of German social security pension benefits as a group upon whom – according to the author of the letter – the double taxation convention which the Netherlands and Germany concluded in 2012 is having a negative impact in terms of their income level. Whereas the old double taxation convention had awarded the right to levy the relevant taxes to Germany, under the current regime this right accrues to the state of residence in so far as the recipient’s annual benefits from his or her state of non-residence do not in the aggregate exceed the sum of 15,000 euros.

Although sample calculations were presented at the time the revamped double taxation convention was going through the endorsement process from which no decline in income was apparent, it should be borne in mind that the precise consequences are very much dictated by the facts and circumstances of the individual taxpayer. Having pointed out that the tax burden experienced by Dutch-resident recipients of German pension benefits to an annual total of 15,000 euros or less is no different than that experienced by same-situation Dutch-resident recipients of a similar amount in Dutch pension benefits, the Junior Finance Minister has concluded that there is no reason unilaterally to grant tax exemption in scenarios involving the right to levy taxes on German pension benefits resting with the Netherlands rather than Germany.

Dutch version: Vragen Belastingverdrag Duitsland