AOW, pension and tax in South Korea: full AOW, and the 1978 treaty

If you live in South Korea, the Netherlands taxes your AOW and an ABP pension from government service. Under the tax treaty a company pension may only be taxed by Korea. For the first five years Korea taxes foreign income only if you transfer it to Korea. Your accrued AOW goes with you in full.

Three things to know in advance:

• Two treaties arrange this: the tax treaty from 1978 and the social security agreement from 2002.
• You no longer get a tax credit on your AOW. So you pay more tax in the Netherlands than you do now.
• Child benefit, the Supplementary Benefits Act, the AIO supplement and the WW stop.

Income	Netherlands	South Korea
AOW, Anw	taxed (article 19(3)); a single person keeps 70% of the net minimum wage	may also tax, and deducts the Dutch tax
Company pension	exempt, after an exemption statement (article 19(1))	taxed; for the first five years only what you transfer to Korea
ABP pension from government service	taxed (article 20)	exempt
Pension held in own company (director-shareholder)	may tax (article 19(2))
Annuity	taxed according to the Belastingdienst	according to the treaty text the country of residence
WW, WIA	own law: the treaty does not cover it	own law
Wages for work in Korea		6 to 45%

How much AOW do you get?

Under article 9a of the AOW, anyone living outside the Netherlands gets the married rate: 50% of the net minimum wage, even if you live alone. That rule does not apply in a country where you can be entitled to AOW under a treaty. Korea is such a country. The agreement was signed in The Hague on 3 July 2002 and has applied since 1 October 2003. Article 5 provides that a benefit is not reduced because you live in the other country. A single person thus keeps 70% of the net minimum wage. The SVB lists South Korea among the treaty countries for the AOW.

The agreement also covers the Anw, the survivors' benefit, and the WIA. What does not go with you:

• Child benefit. Anyone who lives outside the Netherlands is no longer insured for it. Only a posted employee who stays insured in the Netherlands can keep it.
• The Supplementary Benefits Act and the AIO supplement. The AIO stops after 91 days a year outside the Netherlands.
• The WW. It stops as soon as you live outside the Netherlands.

Which country taxes what?

The tax treaty was signed in Seoul on 25 October 1978 and has applied since 17 November 1981. It divides your income like this:

• AOW and Anw (article 19(3)): the Netherlands may tax them. Korea, as the country of residence, may do so too, but deducts the Dutch tax (article 23).
• Company pension (article 19(1)): only Korea. Exception: a pension held in your own company, which the Netherlands may also tax.
• ABP pension from government service (article 20): only the Netherlands.
• Annuity: the treaty text puts annuities with the country of residence, but the Belastingdienst assigns them to the Netherlands. Have a tax adviser look at it before you leave.
• WW, WIA and other income: the treaty has no residual article. Then each country may levy under its own law, and double taxation can arise.

A foreign national who lived in Korea for no more than five years in total in the previous ten years pays tax in Korea only on foreign income that is paid in Korea or transferred to Korea (article 3 of the Korean Income Tax Act). How exactly Korea taxes a Dutch pension, we did not find in the law. Have it calculated before you have your pension transferred to a Korean account.

If you want your pension fund to stop withholding wage tax, you apply to the Belastingdienst for an exemption statement. For that you need your citizen service number (BSN), and proof that you are tax resident in Korea: the "statement of tax liability in your country of residence". See also receiving your pension abroad.