On 1 April 2017, the option to accrue pension with one’s own private limited company was abolished.
Phase-out
The self-administered pension scheme (PEB) is being phased out as a result. This means that the pensioner can choose from the following three options (We’ve outlined them for you before):
- allow the entitlements to continue unchanged (in which case the pension will not accrue any further);
- to reduce the entitlements and then settle them with a discount on the payroll and income tax payable;
- write down and convert into a retirement benefit obligation (RBO).
Offer valid until 1 January 2018
The discount on early redemption of the PEB is highest in 2017. The discount then amounts to 34,5%, compared with 25% in 2018 and 19.5% in 2019. If you’re interested in a lump-sum settlement, you’ll need to act quickly. The settlement must be arranged before the end of 2018.
It remains unclear how the PEB buy-out will work if the pensioner does not live in the Netherlands. For residents of Belgium, the State Secretary for Finance has promised to look into this. Residents of other countries must do so themselves. Incidentally, it is also still unclear how the Belgian tax authorities deal with the write-down and surrender, at a discount, of a PEB in the Netherlands.
ODV
There is less urgency to convert to an ODV. This can still be done in 2018 and 2019. In 2018 and 2019, you will still be able to charge the actuarially calculated pension provision to your private limited company’s profits. This is generally considerably higher than the interest on the ODV. Naturally, the amount converted from a PEB to an ODV will also be higher.
Converting an ODV into an annuity
Many directors and major shareholders, particularly older ones, wish to wind up their private limited company. If the company holds a PEB, this is often not possible without tax implications. This is because transferring the pension into a pension insurance policy is often not the preferred option. Transferring the funds into an annuity policy or a bank savings product is not permitted.
It is, however, permitted to convert an ODV into an annuity (insurance or bank savings product). However, this was not permitted for an ODV where payments had already commenced. The State Secretary for Finance has recently approved the latter after all in a decision. This approval provides the opportunity to wind up private limited companies once the funds have been paid in.
Do make sure you take a close look at the conditions attached to the approval. VWGNijhof is happy to be of service.