Moving Back to India From Europe: The RNOR Window and the Exits That Come Before It

People returning to India from Europe usually plan the RNOR years. They rarely plan the year they leave Europe, and that is where the costs that can't be undone are decided.

RNOR is the Indian tax status that gives a returning NRI two or three years in which most foreign income stays outside Indian tax. It is real, it is valuable, and almost everything written about it assumes you are coming back from the United States with a 401(k). Coming back from the Netherlands, Germany or Switzerland is a different problem, because the European side gets settled on the way out.

What RNOR Is

Once you return to live in India you will be resident for tax, usually by spending 182 days or more in the financial year. You are then Resident but Not Ordinarily Resident (RNOR) if you were non-resident in nine of the previous ten financial years, or spent 729 days or fewer in India in the previous seven. The rules sit in section 6 of the 1961 Income-tax Act and carry over into the Income-tax Act, 2025, which applies from April 2026.

For someone who has been away ten years or more, RNOR typically lasts two financial years, sometimes three, counted in Indian financial years from April to March, not from the date you land.

RNOR also postpones the full foreign-asset disclosure in the Indian return. That obligation starts when you become ordinarily resident, and the penalty for an undisclosed foreign asset under the Black Money Act is ₹10 lakh. The year you turn ordinarily resident is the year every European account has to be on the Indian return, whether or not it earned anything.

The European Exits Come First

Several European countries settle their claims when you leave, before your first RNOR year has started. These are the decisions that can't be undone from Bengaluru.

• The Netherlands issues a protective assessment (conserverende aanslag) on your pension and annuity rights when you emigrate, and on substantial shareholdings of 5% or more. The pension part is collected if you commute or surrender those rights within ten years; the shareholding part never lapses. Taking a Dutch pension early as a lump sum after you return is the move it is designed to catch.
• Germany applies exit tax (§6 AStG) to shareholdings of 1% or more in a company if you have been fully taxable in Germany for seven of the last twelve years. It is charged as if you had sold on the day you left, payable in seven annual instalments. A founder or early employee with equity in a German GmbH is the person this reaches.
• Switzerland lets you take your whole occupational pension as cash once you leave for a country outside the EU and EFTA, India included, on proof that you have left. The withdrawal is taxed at source by the canton where the pension fund sits. When you take it relative to your RNOR years, and whether the Swiss source tax can be recovered under the India–Switzerland treaty, is a two-country decision with real money on each side.

Your Indian Accounts Change Before Your Tax Status Does

Your bank accounts follow exchange control rules, not tax residence. Under those rules you become a person resident in India when you come back to live, from the day you arrive. NRE and NRO accounts have to be redesignated as resident accounts. FCNR deposits can run to maturity. Foreign currency you bring back can sit in a Resident Foreign Currency account.

The consequence most returnees miss: the Indian tax exemption on NRE interest is tied to that exchange control status, not to your RNOR status. It ends when you return to stay, while RNOR is only beginning.

The Sequence

Twelve months before you leave Europe: list every exit charge that applies to you, every pension that can or can't be cashed out, and every account that will need closing, keeping or redesignating. This is the year with deadlines.

The year you leave: the final European return, your deregistration, the pension decisions that are only available on departure, and a count of the days you will spend in India in that financial year, because that count decides when RNOR starts.

The RNOR years: realise foreign gains, receive foreign income abroad, and restructure what you hold outside India while the Indian side of the tax is still closed.

Before you become ordinarily resident: decide what stays abroad, knowing that from then on all of it is on the Indian return and taxed in India.

Where your pensions are taxed once you are settled back is part of a wider question, covered in you're probably planning for the wrong retirement country.