Taxation of foreign income in the Netherlands - Nalog.nl BV
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Taxation of foreign income in the Netherlands

02.06.2023

If you live in the Netherlands, you must report income from sources around the world in your tax return, that is, not only the money that you earned in the Netherlands, but also income from work and business in other countries. But the fact that you report foreign income on your tax return does not always mean that you only have to pay tax on that income in the Netherlands.

Double Tax Treaties

If you receive income from other countries, it may be taxed in several countries at the same time in accordance with national laws and international treaties. If you own assets in a country other than your country of residence, you will also face this situation. If several countries tax the same income or assets, this is called double taxation. Look Webinar, which details the double taxation of income:

To ensure that you do not pay tax on your income or property multiple times, the Netherlands has tax treaties with a large number of countries. Double tax treaty An agreement between two countries on which of them has the right to tax certain income or property. Although such treaties generally follow the same template, their content is not the same for every country. To find out the exact tax implications for your situation, you should review your specific tax treaty.

Nalog.nl experts can help you figure out what taxes your foreign income and property will be subject to. You can choose a consultant here to register:.

If the Netherlands has not entered into a tax treaty with the country of interest, the Double Taxation Prevention Ordinance 2001. The application of this decree also leads to the prevention of double taxation. The Decree applies to a number of developing countries. 

If the aforementioned decree cannot be applied to your situation, there is another possibility: in order not to pay income tax in several countries on the same income, you can obtain double taxation relief in the Netherlands. The amount of the deduction will be visible when filing your tax return, but you can always contact us for a preliminary trial calculation. By specifying how much income from sources in the Netherlands, and how much from abroad, you plan to receive, you can reliably simulate in advance the real tax burden on such income using specialized software. You can order such a calculation through the form at the end of the article.

Pay attention! The concept of avoidance of double taxation most often applies only to income tax and income tax. To assess the possibility of avoiding double taxation on other types of income, you will need the help of a specialist. Income derived from jurisdictions with simplified tax regimes is taxed under special rules.

A non-resident taxpayer or a qualified non-resident taxpayer is not eligible for double taxation relief. On his tax return, he must only report income that is taxable in the Netherlands. However, such a taxpayer in his tax return may request an exemption from taxes for "local" income, which does not need to pay tax in the Netherlands.

For example

Individual X lives in Belgium and works for the same employer: partly in the Netherlands and partly in Belgium. X will receive a total of 50 euros in wages on which his employer has paid income tax in the Netherlands. X earned €000 from his activities in Belgium. In this case, he lists his full salary of €20 on his Dutch tax return, noting in the relevant section that the Netherlands cannot charge income tax on €000. If X only earns €50 in Belgium and earns the remaining €000 from working in the Netherlands, then he is a qualified non-resident taxpayer because at least 20% of his worldwide income is taxed in the Netherlands (€000 / €5000 x 45 = 000%). In this case, he must also indicate his full salary of 90 euros and then apply for a tax exemption on part of the salary of 45 euros.

Learn more about taxpayer statuses from our article

Translation scheme (storage scheme)

If the tax exemption for the year exceeds the tax due, the transfer scheme is applied.

The exemption from double taxation cannot exceed the income tax in boxes. The Transfer Scheme can be used if an individual lists a deductible item on their tax return, but as a result cannot receive a tax exemption.

In such cases, the tax office sends a decision that indicates the amount of foreign income that will be included in the calculation of the deduction next year. There can be several solutions at the same time: for example, a solution for Box 1 and a solution for Box 3.

The tax office will automatically apply the transfer scheme from the declaration for the previous year. That is, next year you no longer need to apply for this scheme yourself. If you wish to receive a transfer scheme for an earlier year, you will need to apply for the scheme. 

You can always contact our specialists for consultation for the avoidance of double taxation for residents of the Netherlands or for an individual assessment of your situation.

The Netherlands is one of the leaders in terms of the number of signed agreements on the avoidance of double taxation, the provisions of which apply to the following types of taxes:

  • corporate income tax (de vennootschapsbelasting),
  • income tax (de inkomstenbelasting),
  • payroll tax (de loonbelasting),
  • property tax (de vermogensbelasting),
  • dividend tax (de dividendbelasting).
  • other types of taxes.

Valid double taxation treaties

In 2023, the Netherlands has double tax treaties with the following countries (details of the treaties can be found here to register::

Albania
Algeria
Argentina
Armenia
Aruba
Australia
Azerbaijan
Bahrain
Bangladesh
Barbados
Belarus
Belgium
Бермудские острова
Bonaire
Bosnia and Herzegovina
Brazil
Bulgaria
Canada
China
Curacao
Chile
Colombia
Cyprus
Denmark
Germany
Egypt
Estonia
Ethiopia
Philippines
Finland
France
Georgia
Ghana
Greece
Hong Kong
Hungary
Ireland
Iceland
India
Indonesia
Iraq
Israel
Italy
Japan
Jordan
Kazakhstan
Kuwait
Korea
Kosovo
Croatia
Kyrgyzstan
Latvia
Liechtenstein
Lithuania
Luxembourg
Macedonia
Malawi
Malaysia
Malta
Morocco
Mexico
Moldova
Montenegro
New Zealand
Nigeria
Norway
Ukraine
Uzbekistan
Oman
Austria
Pakistan
Panama
Poland
Portugal
Qatar
Romania
Russia
Saudi Arabia
Serbia
Singapore
Sint Maarten
Slovenia
Slovakia
Spain
Sri Lanka
Surinam
Tajikistan
Taiwan
Thailand
Czech Republic
Tunisia
Turkey
Uganda
Venezuela
United Kingdom
United Arab Emirates
USA
Vietnam
Zambia
Zimbabwe
South Africa
Sweden
Switzerland

The information posted in the article is current at the time of its publication.

 

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