AOW and pension in Switzerland: since 2021 the Netherlands withholds

If there is one subject on which you find outdated information online, it's this one. Search for "pension Switzerland tax" and you read that your pension is taxed in Switzerland and that the Netherlands withholds nothing. That was right — up to and including 2020.

What changed from 2021

The tax treaty between the Netherlands and Switzerland was amended by a protocol on 1 January 2021, and that amendment turned the taxation around. Since that date the Netherlands — the country your pension comes from — may tax your pension, your annuity and your social-security benefits, including the AOW (the Dutch state pension). The rate is capped at 15% of the gross amount for periodic payments.

Two things make this sharper than with other countries. There is no threshold: unlike with Germany, where the Netherlands may only tax above € 15,000 in pension income, here the levy applies from the first euro. And it makes no difference whether it's a company pension or a government pension — with Switzerland an ABP pension falls under the same rule, with that same 15% ceiling. That is unusual; in most treaties a government pension is taxed in the Netherlands without a ceiling.

You don't pay twice: Switzerland credits the Dutch levy. But your net outcome does change, and it depends on your canton.

Did you have an exemption statement? It has lapsed

Whoever lived in Switzerland before 2021 with a Dutch pension often had an exemption statement, so that the pension fund withheld nothing. Those statements became invalid on 1 January 2021. Since then your paying institution is supposed to withhold again, up to that maximum of 15%.

Watch out with lump sums

If you're toying with the idea of cashing in a small pension or an annuity as a lump sum, this matters: the 15% ceiling expressly does not apply to lump sums. On a lump sum the Netherlands may tax without limit, at the ordinary progressive rate. Whoever considers a lump sum must therefore run the numbers before deciding — the difference between periodic payments and a lump sum can be tens of thousands of euros here.

Your AOW itself: travels along, but the accrual stops

Switzerland isn't an EU member, but through the free-movement agreement it falls under the European coordination rules for social security. Your accrued AOW is therefore simply paid out, without the reduction that applies in countries without a treaty.

The accrual does stop on your departure day: every year outside the Netherlands costs 2% of AOW. You may continue that accrual voluntarily, but the door closes one year after departure — put that date in your diary before you go. In 2026 it costs 17.9% of your income, with a minimum of € 569 and a maximum of € 5,693 per year.

Whether that pays off depends on your plans. If you're going to work in Switzerland, you build up AHV there — 10.6% of your wages, half of which your employer pays — and the European rules add your Dutch and Swiss periods together for your entitlements. For whoever still has years of work ahead, that is usually more favourable than the Dutch voluntary contribution. For whoever isn't going to work any more, it's the other way round. Do mind the Swiss mirror of our 2% rule: there too every missing contribution year leads to a reduction, of roughly one 44th per year.

Work and assets: the rest of the treaty

For whoever is going to work there, the treaty is classic: wages from employment exercised in Switzerland are taxed by Switzerland (article 15), and business profits follow the state of residence unless you keep a permanent establishment in the other country (article 7). For assets that stay behind in the Netherlands: a rented-out house remains fully taxed in the Netherlands (article 6), on dividends the Netherlands as source state may withhold 15% (article 10), and interest is exclusively for your state of residence — on Dutch savings interest only Switzerland levies (article 11).

The 90% rule, and why most people don't reach it

Qualifying non-resident tax liability applies to residents of Switzerland too. If you pay tax in the Netherlands on at least 90% of your worldwide income, you keep the right to the same deductions and tax credits as a resident — including mortgage-interest relief. With a partner you may look at that 90% together.

The practice for pensioners is usually different. If your pension is now taxed in the Netherlands at only up to 15% and the rest in Switzerland, you don't reach that 90%. Then, among other things, the general tax credit and mortgage-interest relief lapse, and you're left with only a limited list. That is precisely the sum that determines whether you keep or sell your Dutch house — and the reason to do it before your departure, not after.