Can I save tax-efficiently for later with an annuity (lijfrente)?

Yes, with an annuity (lijfrente) you save for later as a freelancer (ZZP) and deduct the contribution within your annual margin (jaarruimte), so you pay less tax now. How much you may deduct differs per person and depends on your income and your pension build-up. Find more topics for entrepreneurs on our hub for entrepreneurs.

What is an annuity (lijfrente) for a freelancer?

An annuity (lijfrente) is a savings or investment product with which you build up your own pension top-up, something a freelancer (ZZP) does not get automatically through an employer. You pay in periodically or in one go, and that amount stays fixed until you retire. This way you build your own retirement provision in the third pillar, alongside your state pension (AOW) and any employee pension.

How much annuity premium can you deduct (jaarruimte)?

You may deduct annuity premium up to the amount of your annual margin (jaarruimte), the room that arises when you build up too little pension in a year. The annual margin is a percentage of your income, reduced by the pension you have already built up. Because that differs per person and per year, it is tailored work: we calculate your annual margin, or you use the calculation tool of the Belastingdienst (Dutch Tax Office).

What tax benefit does an annuity give?

The contribution that falls within your annual margin (jaarruimte) is deducted from your income in box 1, so your taxable income drops and you pay less tax this year. You only pay tax once the annuity pays out later, often at a lower rate. This way you shift part of your tax to the future and save for later in the meantime.

When do you need to pay in for it to count for this year?

If you pay in during this calendar year, the contribution certainly counts for this year’s return. There is also limited room to still pay in for the previous year just after the turn of the year. The exact deadline depends on your situation and we confirm that together. Do not wait too long, because your annual margin (jaarruimte) for this year lapses if you do not use it.

Does MOJKA advise on the annuity product itself?

No. We calculate your annual margin (jaarruimte) and process the deduction in your return. We do not advise on the choice of the product itself. Which annuity (lijfrente) suits you depends on your wishes and your risk, and for that you engage a specialised party. If you want to know how much room you have, get in touch with us and we will calculate it for you.

Source: Belastingdienst (Dutch Tax Office), belastingdienst.nl. Amounts and conditions are date-sensitive; check the current rules before you decide.

Author: Mariusz Mojka.