AOW, pension and tax in Ireland: the €25,000 threshold and the USC exemption

What is the remittance basis, and for whom?

Whoever is tax resident in Ireland but not domiciled there pays tax on foreign income only to the extent that they bring it into Ireland. Think of interest, dividends, foreign rent or a foreign pension. Domicile is the country where you intend to stay permanently. Whoever moves to Ireland for a number of years often keeps their Dutch domicile.

Note: as with Malta, the Netherlands may then tax the pension you don't bring to Ireland (article 22 paragraph 4 of the tax treaty).

Revenue, the Irish tax authority, names the limits in its manual:

• salary for work in Ireland never falls under it;
• a transfer from an account where income and capital are mixed counts as income first;
• savings from income from before 1 January of your first Irish year remain untaxed by established practice.

That calls for separate accounts, set up before the move. How this connects with the scheme for assigned employees is covered in SARP and the remittance basis.

What does the Netherlands not let go of?

Your AOW accrual stops on the day you leave: for every year you are not insured, 2% comes off your AOW. You can repair that with the SVB's voluntary insurance, but only if you apply within a year of the end of the compulsory insurance (usually the day you leave). How that works is covered in your AOW accrual stops when you leave. Whether your AOW payment itself changes depends, according to the SVB, on your situation and on the country. Pass on your new address yourself, because the municipality no longer does that.

If you built up a pension or an annuity in the Netherlands with a tax advantage, or have a substantial interest, you get a protective assessment after the return for your year of emigration: an assessment with which the Netherlands records its tax claim when you leave. You usually don't have to pay it for ten years, as long as you keep to the rules, for example by not commuting your pension. For pension and annuity you can then ask for remission. For a substantial interest the assessment stays valid indefinitely.

Work out the threshold before you let the pension start. Below €25,000 only Ireland taxes, with the USC exemption for the AOW. Above it both countries tax. An occupational pension you commute in one go the Netherlands may tax in any case, and it also makes the protective assessment payable.

The sum you make before leaving

Add up your gross pensions, annuities and AOW. If you stay below €25,000, the split is simple. If you go above it, or have a government pension, investments or a private limited company, work it out with a tax adviser who knows both countries, before you build other decisions on it.

In Vertrekklaar this is phase 2 of 5 of the journey, step 2.2: the same steps, but for your situation — in your order, tickable, and with the deadlines watched. See the whole journey to Ireland or go straight to step 2.2 in the open plan.