Pension waivers by director-major shareholders 

If a director-major shareholder (“DMS”) is to waive part of his pension entitlements, it is recommended that an agreement be made beforehand with the Dutch Revenue with regard to the amount that is to be waived. In practice, reaching such an agreement is not always an easy task. There is no uncertainty regarding the tax-law treatment of pension entitlements that may or may not vest. The problem is with the more fundamental question: When does the Dutch Revenue consider a situation to involve pension entitlements that will not vest?

Using a sample case, the author outlines how the Central Pensions Bureau (“CAP”) handles a DMS’s request to temporarily and conditionally waive his pension. The article discusses the reasons why the CAP did not wish to grant the request and a number of arguments refuting that position.

The author concludes that indexation can be foregone in the case of an open-indexed pension if the indexation would lead to a shortfall in the result. But a DMS who tampers with the amount of the pension terms without obtaining prior Dutch Revenue approval will be taking quite a risk. It would be preferable, from a legal-certainty perspective, to have policy criteria developed and published in this regard.

Original title: Prijsgeven van pensioen door de dga