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Qualifying for non-resident taxpayer status

On November 23, 2015 by Dutch Umbrella Company

Working in the Netherlands: Pay income tax in the Netherlands and benefit from tax exemptions and deductibles

You live abroad and earn an income in the Netherlands. In that case, you are a so-called non-resident taxpayer. Previously, this meant you could choose to pay tax in the Netherlands. That was the case prior to 2015. It can be highly advantageous, because you benefit from Dutch regulations: tax credits and deductibles. For example, deduction of mortgage interest, which also applied to your overseas home. This is still the case, although you must satisfy a number of conditions.

Qualifying for non-resident taxpayer status

Since 2015, the so-called scheme for non-resident taxpayer status has been in force. This means you can no longer choose to be treated as a resident taxpayer. Non-resident taxpayers in the Netherlands can choose to pay income tax in the Netherlands if they meet a number of conditions:

– You live in an EU country, in Liechtenstein, Norway, Iceland, Switzerland, Bonaire, Saint Eustatius or Saba;
– You pay tax in the Netherlands on at least 90% of your total earnings worldwide;
– You are able to submit an income statement to the revenue service of the country in which you reside.

If you meet these conditions, tax is calculated on the basis of your income from, and capital in, the Netherlands. Income that is not subject to tax in the Netherlands is not taken into account. That element of income is relevant only for calculating whether you satisfy the 90% condition.

Deductibles

You now qualify for the same tax deductibles as a resident of the Netherlands. These deductibles are:
Negative expenditure in respect of your owner occupied home abroad, outgoings for income protection and personal deductions. Moreover, these rights only apply if you or your tax partner are not entitled to these deductibles in the country in which you reside.

Do you not meet all the conditions? Then you are a non-resident taxpayer. In calculating income tax, your deductibles, tax credits and tax-free allowance are not taken into account. In that case, you may no longer deduct mortgage interest for your owner-occupied home abroad on your tax return. You only pay tax on that element of your income that is subject to tax in the Netherlands. If you are a non-resident taxpayer, you cannot have a tax partner. Thus, you only pay tax on your own income and/or capital.

Contact

Together with our Income Tax partners, the Dutch Umbrella Company can assist you with submission of your tax return for a fixed price.

Please do not hesitate to contact us if you have queries relating to this blog, or to submission of your tax return to the Dutch Tax and Customs Administration. You can reach us via +31 20 820 1560 or [email protected]