In addition to income tax, you pay a personal contribution under the Health Insurance Act on your profits, wages or other income from work. This contribution is also payable on your state pension (AOW) and your occupational pension.
If income tax is deducted from your earnings, your employer or benefits agency will pay the contribution on your behalf. You will receive a tax assessment from the Tax and Customs Administration for the Zvw contribution on other income. You do not pay a Zvw contribution on the part of your earned income that exceeds the maximum contribution income (in 2017: €53,697).
Health Insurance Scheme contribution
No tax or contributions are deducted from pensions received from Germany. The Dutch Zvw contribution must therefore be paid following a tax assessment. You will receive this assessment each year following your income tax return.
A Dutch pensioner wants the tax court to rule on whether this is justified. He lives in the Netherlands and, in 2013, received, in addition to the AOW (€4,358), a German pension (€1,682) and a benefit from a German Renteversicherung (€7,255). The Dutch tax authorities have calculated the Zvw contribution on the basis of €8,937 (€1,682 + €7,255). The contribution under the Health Insurance Act amounts to €504, and the Tax and Customs Administration is charging €24 in tax interest.
The Arnhem-Leeuwarden Court of Appeal confirms that the Zvw contribution assessment was correctly imposed. The person concerned is insured in the Netherlands for special medical expenses. He is therefore also insured under the Health Insurance Act and is liable to pay the relevant contributions in the Netherlands. Both German benefits qualify as pensions on which Health Insurance Act contributions must be paid in the Netherlands. The assessment therefore stands.
Tax
During the proceedings, the Dutch pensioner also argued that his German benefits were subject to double taxation. This is because he receives annual tax assessments from the German tax authorities requiring him to pay Einkommensteuer.
Although the income tax assessment is not the subject of the dispute, the tax court explains that there is no double taxation. Under the tax treaty between the Netherlands and Germany, Germany is entitled to levy tax on the pension payments. Germany therefore issues the tax assessments annually
The Netherlands does, however, treat German pensions as income taxable in the Netherlands. However, the Dutch tax authorities subsequently grant a reduction in respect of the income tax calculated in the Netherlands. This reduction, designed to prevent double taxation, is neatly incorporated into the income tax assessment issued to the pensioner.
New tax treaty between the Netherlands and Germany
On 1 January 2016, the new tax treaty between the Netherlands and Germany came into force. Due to the one-year transition period, the effects of this new treaty will only really be felt by most of those affected from 2017 onwards.
For pensioners receiving benefits from across the border, amongst others, the new tax treaty could result in a significant increase in the tax they owe.
Cross-border issues
Living in the Netherlands and receiving income from Germany (or another country). Or living in Germany (or another country) and receiving income from the Netherlands. This involves specific considerations – not only in terms of taxation, but also regarding the various compulsory insurance schemes and the associated premiums. VWGNijhof can help you sort out this puzzle.