The European Commission has summoned the Netherlands to the European Court of Justice (ECJ) for taxing pensions moving abroad.

It argued that the taxation conflicts with the principle of free movement of capital.

According to the EC, workers must be able to transfer pension capital to another member state, even if the country of destination allows taking out a lump sum of up to the entire pension entitlement.

Twelve member states, including Germany, Belgium and Denmark, have already introduced this option, however, in the Netherlands, the country is only to allow a limited lump sum as part of its pending pensions reform; and it levies a tax on value transfer to these member states, while refraining from taxation in case of a domestic transfer.

The EC concluded that this approach “seriously hinders the principles of free traffic of workers, services and capital”.

It had already started an infringement procedure against the Netherlands in 2012, followed by a “reasoned advice” in 2018.

As the Netherlands had ignored the call for legal adjustments, the EC has now issued the country a subpoena to appear before the ECJ.

Erik Lutjens and Hans van Meerten, both professors of European pension law, indicated that the Netherlands might not have implemented pensions directive IORP II correctly on collective value transfer, as the Dutch rules are stricter for foreign transfers.

Van Meerten said he had lodged a complaint with the EC, which could lead to a substantive infringement procedure. Meubel, the €3.5bn Dutch pension fund for the furnishing sector, has announced that it will replace its current pensions provider Centric with TKP Pensioen.

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