Early Retirement in Leiden: the Tax Implications at a Glance
Early retirement sounds tempting, but in Leiden and surrounding areas this has serious tax implications. You lose employment allowance, pay revision interest, get an AOW gap and permanent pension reduction. District Court of The Hague, Leiden Location handles pension matters regionally. For free advice: Legal Counter Leiden, Stationsweg 46.
Legal Assistance in Leiden for Early Retirement
Residents of Leiden who want to take early retirement can go to:
- District Court of The Hague, Leiden Location – For legal proceedings regarding pension schemes
- Legal Counter Leiden – Stationsweg 46, free advice on tax implications (Mon-Wed 9-17h, Thu-Fri 9-13h)
Make an appointment for personal calculations of your net income after early retirement.
Key Tax Implications of Early Retirement
The main effects of early retirement in the Leiden region:
- No employment allowance anymore: €5,052 (2024) lapses entirely
- Revision interest: Up to 20% on stamped-off pension capital
- AOW gap: €1,400 net/month less until age 67
- Lifelong reduction: 6% per year of early retirement
- No further accrual: Lower total pension payout
Average income drop: 25% compared to continuing to work.
Tax Burden Rises Sharply with Retirement in Leiden
Without employment allowance (€5,052) and only with general tax credit (€3,362) in 2024, your tax burden increases significantly.
2024 Tax Rates
| Income Bracket | Rate |
|---|---|
| Up to €75,624 | 36.97% |
| Above €75,624 | 49.50% |
Leiden Example: €40,000 gross as employee = €32,000 net. As retiree = €28,000 net. Difference: €4,000 per year.
Revision Interest: the Hidden Costs of Stamping Off
With stamping off (reducing pension for earlier start) you pay max. 20% revision interest on the stamped-off portion.
Leiden Practice Example
Pension capital €450,000, 2 years early retirement = €90,000 stamping off.
Revision interest: €18,000 (one-time to the Tax Authorities).
"Get advice from the Legal Counter Leiden before you stamp off."
– Pension Expert Leiden Region
AOW Gap: Biggest Pitfall in Early Retirement
Between early retirement age and AOW (67 years 2024) you miss €1,400 net per month AOW.
3 years early retirement = €50,400 less income before AOW starts.
Solution: Use pension fund or annuity, but first calculate with District Court of The Hague, Leiden Location advisors.
What Now? Action Plan for Leiden Residents
- Calculate revision interest and net income
- Make appointment Legal Counter Leiden, Stationsweg 46
- Check pension scheme with your fund
- Consider alternatives (part-time, early retirement scheme)