Taxation of US pension in the Netherlands - The TaxSavers?

Reporting Foreign Pension Benefits in your Income Tax Return

Does the US have an income tax treaty with the Netherlands?

The Convention replaces the existing income tax convention between the United States and the Kingdom of the Netherlands signed at Washington in 1948 and last amended in 1965.

Do you pay tax on US pension if you live abroad?

Will I Pay Taxes on My Pension Income When Living Overseas? Yes. Even if you are enrolled in a foreign pension plan, the IRS will typically treat your pension as income and tax it accordingly. With that said, the US has a number of tax treaties and credits in place to protect expat retirees from double taxation.

Do US citizens pay taxes in the Netherlands?

This is true regardless of where you live—from Atlanta to Amsterdam. You are also required to report your worldwide income, not just income that came from a US source. In addition, as an American living in the Netherlands, you will probably also have to file a Dutch tax return.

Does the Netherlands tax foreign pensions?

This includes both your Dutch income and your foreign income, which includes your foreign pension benefits as well. However, it's important to note that this doesn't necessarily mean you will always be taxed on these benefits in the Netherlands. Not all foreign pensions are treated as taxable income.

Can an American retire in the Netherlands?

Expatriates in the Netherlands Those who wish to move to the country will be pleased to know that retirement in the Netherlands for expats is very much possible. Americans, particularly, are allowed visa-free entry into the country for 90 days. Those who wish to stay longer must apply for a permit.

Do you pay tax on a US pension?

The taxable part of your pension or annuity payments is generally subject to federal income tax withholding. You may be able to choose not to have income tax withheld from your pension or annuity payments or may want to specify how much tax is withheld.

Can I transfer my pension to Netherlands?

Answer: You can transfer the value of pension accrued abroad to a Dutch pension provider if the law of the country from which you wish to transfer your pension so permits. You should therefore contact the foreign pension provider and/or the foreign supervisory authority.

Which countries do not tax pensions?

Top 9 Tax-Free Retirement Countries for Americans Abroad Panama. Costa Rica. Portugal. Ecuador. Greece. Belize. Nicaragua. The Philippines. More items...

Which countries social security exempt from US taxes?

U.S. citizens who are residents of the following countries are exempt from U.S. tax on their benefits. Canada. Egypt. Germany. Ireland. Israel. Italy (You must also be a citizen of Italy for the exemption to apply.) Romania. United Kingdom.

Taxation of US pension in the Netherlands

Do you enjoy your retirement in the Netherlands, and do you receive a US pension? In this case, it is important that you pay close attention to the type of pension you receive and where it is taxed. In this article, we’ll cover the different types of US pensions and their taxation. If you receive a pension from the United States, read on to avoid double taxation in the Netherlands.

Help with the tax return

Could you use some help with this? We are happy to help. Fill in the contact form or call us at +31 20 217 0120 to discuss the possibilities.

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How is your US pension taxed in the Netherlands?

State pension from the US

In the Netherlands, you have to state your worldwide income, including the pension. However, according to the tax treaty between the Netherlands and United States, an American state pension is taxed in the United States. That is why, in this case, you will always have a tax liability with the IRS (US tax authorities).

As a taxpayer in the Netherlands, you state this state pension in box 1 (income from work and home ownership). Fortunately, you can claim an exemption for the pension that is taxed in the US in the Netherlands: the double tax relief. Even though this pension is not taxed in the Netherlands, it is included in the calculation of the social security contribution.

401k pension

A 401k plan is a retirement account made available to employees who wish to save for their retirement, set up by some employers. The employer holds back a part of the employee’s salary and places it in an account (on which you receive interest). What makes the 401k retirement plan so popular is that the investment is deducted from your gross salary, and you only pay tax on it when it is paid out. In addition, some employers are even willing to match the contributions made by their employees with additional money.

But what if this is paid out to you when you live in the Netherlands? According to the tax treaty between the United States and the Netherlands, the Netherlands may levy tax. The Netherlands sees this as a pension and, therefore, it is taxed in box 1. The total value of the 401k is not seen as capital, so it is not taxed in box 3 (savings and investments).

IRA (Individual Retirement Account)

Not all employers offer a 401k plan. A good alternative is an IRA, which stands for “Individual Retirement Account”. An IRA is an investment account to save for your retirement with tax-free growth. You can deposit money from your gross salary. It looks a lot like the 401k plan. However, it’s more common to invest yourself in an IRA than in a 401k. In addition, you don’t have an employer that deposits an additional amount to the account.

Taxation on a traditional IRA works the same as on a 401k. The payouts from an IRA are taxed in the Netherlands as a pension (box 1). The total assets in the IRA are therefore not taxed in box 3.

Roth IRA

A Roth IRA is also a retirement investment account and works the same as a regular IRA. However, there is a big difference in tax. Contributions to a Roth IRA are made with after-tax dollars. That means you pay tax upfront, not when it is paid out (during your retirement).

For this reason, Roth IRA is not seen as a pension in the Netherlands. Instead, the Dutch tax authorities see this as assets, which means you don’t pay tax on it in box 1, but in box 3 (savings and investments).

Help with your US pension in the Netherlands?

Do you receive a pension from the United States? That makes your tax return more complex. Make sure you don’t pay double tax. Do you want help with this, or do you have questions about your US pension? We are happy to help you. Feel free to contact us using the details below.

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Taxation of US pension in the Netherlands - The TaxSavers (2024)