Dutch minister of finance Wouter Bos has withdrawn a measure that broke with the so reverse-rule (‘omkeerregeling’) which had been designed to limit tax benefits on pension contributions, but final pay pensions of above €500,000 will instead now be levied. A nine-hour debate was held in the Hague last week about fiscal measures against fat cat salaries and led Wouter Bos to withdraw his earlier regulation which saw the Dutch ‘omkeerregel’ stopped for pensions above €185,000.
The ‘omkeerregel’ was introduced as the Dutch fiscal treatment of pension accrual and was intended to allow pensions savings contributions to be tax-free up to a certain premium levels and conditions, while the benefits paid out are taxed. But ministers were unhappy with a proposal unveiled in September last year to impose a limit on controbutions, and announced in December 2007 they would reverse the plan ahead of its 1 January, 2009 implementation.
The second change unveiled by the minister now means final salary pensions of above €500,000 will now be levied with a 15% tax, to prevent highly-paid managers from holding untaxed money via their final pay pension plan. Pieter Omtzigt MP of the Dutch Christian Democrats told IPE his party supports both measures.
“Almost everybody in the Netherlands now has an average pay pension, so it is not very fair if the directors agree to a final salary pension and then inject it with a couple of million.” (source Ipe)