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Protective assessment upon emigration from the Netherlands - why did I get one?

 
Special provisions may apply if you relocate to a country other than the Netherlands. Should any of these special provisions apply to you, then the tax authorities will issue a separate tax assessment. This is a so-called protective assessment (in Dutch "conserverende aanslag"). As this assessment often concerns a sizeable amount, in addition to the regular tax assessment pertaining to the year of emigration, few recipients really understand it. Expatax explains the consequences of a protective assessment in this article and how one can prevent the actual collection.

Calculation

The protective assessment is calculated by deducting the income tax and social insurance premiums that you owe withoutthe income to be preserved, from the income tax and the social insurance premiums that you owe with the income to be preserved. No default interest need be paid on the amount of the protective assessment. The income to be preserved is the amount that the protective assessment is imposed upon. The amount depends on your personal situation.

Under which circumstances can a protective assessment be imposed in the event of emigration?

There may be income to be preserved further to your emigration in the following cases, resulting in the issuing of a protective assessment:

  • You have accrued pension rights in the period during which you lived in the Netherlands. 
  • You have a substantial interest in a company that is established in the Netherlands.
  • You are entitled to the advantages further to homeowner capital sum insurance.
  • You are entitled to the advantages further to annuity insurance, the premiums of which were paid up in the past. 


Accrued pension rights

Did you build up pension rights in the Netherlands and did you deduct the premiums from your income? Then this involves a fiscal advantage on your part. This fiscal advantage is claimed back 'with reservation' upon emigration. If you complete an M-form, then you are to indicate the market value of your pension rights at the time of the emigration. You can request this value at your pension fund or pension insurer. The tax authorities may also obtain this information directly from the pension fund, even if the value is not specified in the assessment.

The value of your pension rights are added to you income in box 1. This addition is then increased by 20% revision interest.

Substantial interest in a company that is established in the Netherlands

Do you have a substantial interest in a company that is established in the Netherlands? Then the tax authorities will assume a fictitious alienation of your substantial interest at the time of the emigration. The profit further to this substantial interest that is the result of this fictitious alienation is included in your income in box 2.

Similar provisions apply to the homeowner capital sum insurance and the annuity insurance. 

Deferment of payment

You can be granted a deferment of payment for the tax and the revision interest that you are to pay on the income to be preserved. This can be arranged automatically or at your request and subject to certain conditions. The deferment of payment will apply for a maximum of 10 years. If you do not commit any so-called "prohibited act" during this period, then you may request the remission of your tax debt after 10 years. Should you commit a so-called ‘prohibited act’ during this period, for example if you commute your pension, then the remission will be withdrawn and you will have to pay the tax debt.

Are you to immigrate to a non-EU country? If so, then there are some circumstances under which you must guarantee the tax authorities that you will ultimately pay the debt concerned. There are a number of options in providing surety:

  • a bank guarantee 
  • a right of mortgage 
  • a pledging 
  • pledging pension capital to the tax authorities 


In the event of emigration to a non-EU country, you are to always provide surety for the part of the assessment regarding:

  • a homeowner capital sum insurance 
  • a substantial interest 


Regarding providing surety for the part of the assessment that concerns pension rights and annuity rights, you need only do so if you place these claims with a foreign insurer or pension fund. 

You are not required to provide surety if you emigrate to an EU-country.

Tax treaty

There is a possibility that your new country of domicile will also levy tax on your claims or benefits. It should then be determined whether it is possible to prevent the double taxation. Significant in this respect is whether or not a tax treaty has been concluded between your country of domicile and the Netherlands, in which the taxation is allocated to one of either country. If no tax treaty applies, then it may be possible to appeal to the Dutch unilateral regulation for the prevention of double taxation. 

Summary

A protective assessment is an assessment in which the tax debt is determined, but usually not collected. The income tax owed on the income to be preserved is calculated separately and specified in a protective assessment. In the event of a course of affairs not provided for and not desired in legislation, for example the commuting of pension rights following emigration, the protective assessment will then be collected. However, taxation can be prevented in many cases.

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