AOW, pension and tax in New Zealand: who levies what, and what comes off

For the AOW (the Dutch state pension), New Zealand is a treaty country, and that is good news. But behind that good news sit three things that differ from every European destination, and all three cost money if you discover them too late.

Your AOW travels with you, and stays at 70%

As a single person you keep the full single person's pension of 70% of the minimum wage in a treaty country. Outside treaty countries that drops to 50% — that difference is why the phrase "treaty country" keeps coming back here.

Payment is made in New Zealand dollars. Your net amount therefore moves with the exchange rate, and that is no minor detail if your AOW is a substantial part of your income.

What does stop is the accrual. Every year you live outside the Netherlands costs 2% of your eventual AOW. If you want to close that gap, you can take out voluntary insurance with the SVB — but register within one year of leaving, because after that the door is shut. The premium is 17.9% of your income, with a minimum and a maximum per year.

The Netherlands keeps taxing your AOW — and precisely not your pension

This is the first surprise, and it sits in the 1980 tax treaty.

Article 19, paragraph 2 covers government pensions and also pensions paid under the social security system of one of the countries. Those may be taxed in the country that pays them. They are taxable only in your country of residence if you are a national of that country of residence.

Translated to your situation: your AOW is a social security pension, you are a Dutch citizen, so the Netherlands levies. Only once you take New Zealand citizenship does that taxing right shift to New Zealand.

Article 18 arranges the opposite for private pensions and annuities: those are taxable exclusively in the country where you live. So New Zealand.

In concrete terms that means: you deal with two tax authorities at once, and one exemption request is not enough. Your AOW runs through Dutch wage tax withholding; your occupational pension and annuity belong in your New Zealand return. Have this checked by a tax adviser with treaty knowledge before the first payment, not after.

Your AOW will later come off your NZ Super

The second surprise is the sharpest, and it applies to everyone who lives in New Zealand long enough to become entitled to NZ Super.

New Zealand has a direct deduction policy for overseas government pensions. Work and Income puts it bluntly: for every dollar you receive from an overseas pension, a dollar comes off your New Zealand payment. The conversion is done on the gross amount. If your overseas pension is higher than your NZ payment, you receive only the overseas pension.

And there is no way around it: if you or your partner is entitled to an overseas pension, you are obliged to apply for it.

So there is no stacking. Whoever counts on receiving both AOW and NZ Super later is counting wrong.

And you probably won't get NZ Super anyway

The third surprise makes the second academic for most emigrants. For NZ Super you have to be 65, hold a resident visa and have lived in New Zealand for a number of years — and that number is rising from ten to twenty years, staggered by your date of birth. Whoever was born on or after 1 July 1977 needs twenty years. On top of that, without exception: at least five years since your fiftieth birthday.

One softening: the 2003 social security agreement with the Netherlands lets the time you were insured under the Dutch national insurance scheme from age twenty count towards that residence requirement. That genuinely helps — but it brings you straight back to the direct deduction, because what you bring in that way is then offset against your AOW.

The sober conclusion: for your old age, count on your Dutch AOW and your Dutch pension, and treat NZ Super as a possible top-up you may not get.

What you lose in the Netherlands

Two things that don't come into play with a European destination.

Qualifying non-resident taxpayer status lapses. That scheme — under which you keep your Dutch deductions and tax credits as an emigrant — applies only to the EU, the EEA, Switzerland and the BES islands. New Zealand falls outside it, and there is no residual category. No mortgage interest relief, no tax component of the tax credits. What remains is the entrepreneur's allowance for a Dutch business and the tax-free allowance in box 3.

The protective assessment becomes work here. If you have built up a pension, an annuity, a substantial shareholding or an endowment insurance linked to your own home, the Belastingdienst imposes a protective assessment on emigration. If you move within the EU, you get a payment deferral automatically. If you move outside it — and New Zealand is outside — you have to apply for the deferral yourself and put up security: a bank guarantee or a mortgage right. Arrange that before you leave, and budget for the cost of the guarantee itself. If you stick to the Dutch rules for ten years, you can then ask for the assessment to be waived.

For your year of emigration, finally, you file the M return, these days simply online. Adjust your provisional assessment before you leave — otherwise you spend a year paying advances on deductions you no longer have.