AOW, pension and tax in Australia: everything moves to the state of residence — except your ABP

Australia has both a social-security agreement and a tax treaty with the Netherlands, and together they do something few destinations do: they make the tax side of your pension clear. Almost everything moves to one tax office — the Australian one. This article sets out what comes along, what stays behind, and where the Australian side surprises you.

Your AOW comes fully along — and moves along for tax

Australia is on the SVB's list of treaty countries: the AOW (the Dutch state pension) you have built up is paid out there in full, and a single person keeps the full single-person pension of 70% — the drop to 50% applies only outside treaty countries. Accrual does stop on your departure day: every year outside the Netherlands costs 2%. You can repair that with the voluntary insurance (apply within one year of departure, at most ten years) at 17.9% of your income, with in 2026 a minimum of € 569 and a maximum of € 5,693 a year.

For tax, Australia is then the mirror image of New Zealand. The tax treaty from 1976 says in article 18 that pensions — "including pensions granted under a public social-security scheme", so your AOW too — and annuities are taxable only in your country of residence. AOW, company pension and annuity therefore all three go to the Australian tax office. Apply to the Belastingdienst for the exemption certificate, so that the Dutch withholding stops.

The exception: your government pension

Article 19 keeps one category at home: remuneration including pensions for services in government functions may be taxed by the country that pays them. An ABP pension from a public function — education, police, defence, municipality — therefore stays taxed in the Netherlands, even if you live in Sydney. A mixed pension is treated per part: the government part stays Dutch, the private part goes along to Australia.

The Australian side: ordinary income, with an exempt part

Australia taxes your Dutch pension as ordinary income in your tax return. But there is a softening you need to know: the undeducted purchase price (UPP). The part of your pension that is a repayment of your own contributions is tax-free — you claim it as a deduction on the taxable amount. For Dutch pensions the ATO has a fixed route to determine that deductible part. It isn't a big amount, but it's free money for whoever applies for it — and invisible to whoever doesn't know it.

The Age Pension: a test, not an accrual

The Australian state pension works fundamentally differently from the AOW: the Age Pension is not an accrual pension but a provision with an income and assets test. Your Dutch AOW and pension count in that test — so whoever has a decent Dutch pension gets little or no Age Pension, not because something is reduced but because that's how the test works.

The social-security agreement does help on the access side: it lets you add together your Dutch insurance periods with Australian years of residence to meet the minimum requirements, and it arranges that agreement pensions can be paid in both countries. In addition, as a worker in Australia you build up superannuation — the compulsory employer contribution that is the real Australian pension. So for your old age count on: AOW plus Dutch pension plus superannuation, and treat the Age Pension as a safety net you'll probably only partly touch.

What you lose in the Netherlands

The familiar non-EU list applies here too. The qualifying non-resident taxpayer status lapses — that scheme applies only to the EU, the EEA, Switzerland and the BES islands — so no mortgage-interest relief on a retained Dutch home and no tax part of the tax credits. And on your accrued pension, annuity and substantial shareholding the Belastingdienst imposes a protective assessment on emigration: outside the EU you apply for the deferral of payment yourself and security can be demanded. If you keep to the rules for ten years, remission follows; for a substantial shareholding the assessment remains valid indefinitely.

In Vertrekklaar this is phase 4 of 5 of the journey: the same steps, but then for your situation — in your order, tickable, and with the deadlines watched. See the whole journey to Australia.