An employer can grant the employee pension rights. That implies that a pension insurance is taken out with one of the Dutch pension insurance companies. The employer can pay the full annual pension premiums or the employer can ask the employee to make a contribution as well. This payment made by the employee is tax deductible immediately in the salary specification. What is the change as per 2015?
Pension build up limited at € 100.000 salary
From the start of 2015 it is no longer possible to build up a pension over salary exceeding the amount of € 100.000 for pension build up rights purposes. That implies if you have a 30% ruling that your pension build up rights are limited from a gross salary of € 142.857. The taxable salary and the base for the pension calculations is 70% of the gross salary being € 100.000.
Excessive build up possible, but no fiscal advantage
In the event you would like to build up more pension rights as your salary is exceeding the maximum amount of € 100.000, this is possible, however, this will be done without fiscal facilities. That implies you cannot deduct the premiums paid from your taxable income and the benefit received when you reached the pensionable age is for this part not taxed.
Although the amount exceeding the € 100.000 is not fiscal facilitated, the Dutch tax office has set a limit to the amount you can contribute in premiums to this part of the pension, being 1,875% of the income exceeding the € 100.000 salary for pension build up rights.
Why would any employee make use of the excessive build up?
If the fiscal facilities no longer apply, if there is set a maximum amount of premium that can be paid and if the pension age is postponed constantly, why would you take out such a ‘pension’ insurance? It is much more favorable to take out another insurance not being a pension insurance. You are no longer required to have this insurance with a Dutch insurance company, can be any country. You are not limited in the amount that is paid into the insurance and you can set yourself the timeline of that insurance.