Background

Pension funds typically benefit from favourable tax treatment. Accordingly, Dutch pension funds are generally exempt from Dutch corporate income tax (CIT) and dividend withholding tax (DWT). Foreign pension funds may also qualify for exemptions from Dutch CIT or DWT if they are comparable to qualifying Dutch pension funds.

This comparability test is key to accessing Dutch tax exemptions. The pension scheme managed by the foreign fund must meet several strict criteria to be considered comparable under Dutch tax policy. In practice, the comparability criteria have proven to be too rigid, which inflexibility has made it difficult for foreign pension funds to obtain Dutch tax relief.

The Dutch tax authorities have now clarified two elements on how they assess comparability, signalling a more accommodating approach to foreign pension systems and typical deviations.

Knowledge Group position 1: lump-sum payments 

The first position concerns a foreign occupational pension scheme that allows a one-off lump-sum payment when a survivor’s pension ends due to remarriage. Normally, the Dutch pension system prohibits conversion of pension entitlements into a lump‑sum payment.

The Dutch tax authorities now clarify that not every lump-sum payment is prohibited, and the purpose and context of the payment are decisive. Where the payment reflects the principle of care, it does not prevent access to the Dutch exemption.

Knowledge Group position 2: professional pension schemes 

The second position concerns mandatory professional pension schemes that replace the statutory pension for specific professions. Under Dutch policy, pension schemes that fall within a country’s social security system do not qualify for the Dutch pension fund exemption.

The Dutch tax authorities clarify that such professional schemes do not automatically form part of the social security system. Relevant factors are that participation is limited to a defined professional group, the scheme does not provide a general or universal benefit, and benefits are funded on a capital-funded basis rather than through a pay-as-you-go system. As a result, these schemes may still qualify for the Dutch tax exemptions, provided that the other conditions are met.

Our view

These positions signal a more substance-based assessment by the Dutch tax authorities. The new guidance is especially relevant for certain German pension institutions, including the commonly used professional pension schemes organised as Versorgungswerke, although it may also be applied in a broader context.

The Knowledge Group positions should be viewed against the background of broader concerns about whether a rigid application of the Dutch pension fund exemption policy is compatible with EU law. While the guidance addresses specific comparability issues and appears to be of limited scope, it may nevertheless point towards a broader reassessment of the applicable comparability criteria. Foreign pension institutions encountering difficulties in establishing comparability with Dutch pension schemes may therefore wish to consider whether their current treatment reflects an overly rigid application of those criteria in light of EU law.

Furthermore, practical limitations may remain for foreign pension institutions investing through vehicles that are treated as non-transparent under Dutch tax classification rules. This is particularly relevant for German pension investors using commonly applied vehicles such as Sondervermögen. Where such vehicles are classified as non-transparent for Dutch tax purposes under the rules in effect since 1 January 2025, access to the Dutch pension fund exemptions may be restricted in practice. A reassessment of existing Sondervermögen structures may therefore be appropriate, taking into account the updated Dutch classification framework. In this respect, reference is made to our article on the Dutch tax classification of investment funds.

Should you require legal or tax advice on the Dutch tax treatment of foreign pension funds and investment structures, please contact your trusted Loyens & Loeff adviser or one of the contacts listed below.