On 19 June 2026, the Dutch Supreme Court handed down an important ruling affecting residents of the Netherlands who receive a German pension. It was established that the Netherlands cannot automatically tax a German pension in full. Only the portion accrued through tax-deductible contributions made in Germany at the time is taxable.
What was at stake in the German pension case?
The case concerned a taxpayer who had worked in Germany for many years and had been compulsorily insured with the Deutsche Rentenversicherung (German statutory pension insurance). After moving to the Netherlands, he received German old-age pension benefits. The Dutch Tax Administration taxed these benefits in full under Box 1.
However, the taxpayer argued that only 45 per cent of his German pension contributions had been tax-deductible at the time. Therefore, in his view, only 45 per cent of the benefit should be taxed in the Netherlands. This reasoning was accepted by both the Arnhem-Leeuwarden Court of Appeal and the Supreme Court.
Why is this judgement important?
The ruling confirms the important tax principle that there must be prior tax relief before taxation can be applied. Insofar as contributions were not tax-deductible while the pension was being accrued, the Netherlands cannot subsequently tax the accrued pension benefits in full. The Supreme Court bases this on the specific provision for foreign pension schemes in Section 3.82 of the Income Tax Act 2001.
Possible implications for other German old-age provisions
This judgment appears to have implications that extend beyond the Deutsche Rentenversicherung.
The same principle may be relevant to other German old-age provisions that qualify as pension schemes. Consider situations where no or limited tax relief on contributions was available during the accrual period, for example. In such cases, it could be argued that Dutch taxation should also be limited to the portion corresponding to the tax-favoured part of the accrual.
However, this does not automatically mean that every German pension or retirement scheme will be treated in the same way. Each scheme must be examined to establish:
- Whether it constitutes a pension scheme for tax purposes;
- To what extent contributions were tax-deductible in Germany; and
- How the accrual and benefit phases are structured.
Therefore, the judgment primarily provides an important argument for a closer assessment of German pension entitlements, which may have been taxed in full in the Netherlands until now.
And what does this mean for the Tax Treaty between the Netherlands and Germany?
At first glance, the judgment has no direct impact on the allocation of taxing rights under the Netherlands–Germany Tax Treaty.
Article 17 of the Treaty specifies which country may tax pension payments, including a threshold of €15,000 for certain pensions. However, the judgment does not address the question of which country may levy tax, but rather how much of the payment constitutes taxable income in the Netherlands. This is therefore a matter of Dutch national legislation, rather than the treaty allocation of taxing rights.
Nevertheless, the judgment may indirectly influence the application of Article 17. Where only part of a pension payment qualifies as taxable for tax purposes, debate may arise over whether the treaty threshold of €15,000 should be applied to the gross payment or the taxable portion. As the Supreme Court has not yet ruled on this matter, it remains an open question for the time being.
Conclusion for Dutch nationals with a German pension
The judgement may have significant consequences for Dutch residents with a German pension. It is no longer a given that a German pension payment will be fully taxable in the Netherlands. In particular, if there was no full tax deduction for contributions while the pension was being accrued in Germany, the Dutch tax treatment should be critically assessed.
Therefore, advisers and taxpayers with German pension entitlements should consider not only the amount of the benefit, but also how the contributions were taxed during the German accrual phase.
Practical tip:
Do you have a German pension? If so, make sure you keep not only your annual pension statements, but also the original agreement with your pension provider, along with any other documents relating to the accrual phase. These documents contain important information that may be crucial when assessing the tax treatment of your pension benefits.
This ruling may have financial implications for you. If you are receiving a German pension or another German retirement benefit, are you unsure whether the Dutch tax treatment is correct? We would be happy to assess whether this ruling could benefit you. Please contact our specialists for personalised advice.
