Tax liabilities for resident  and non-residents in The Netherlands

So-called ‘resident’ taxpayers are subject to tax in the Netherlands for their worldwide income. ‘Non-resident’ taxpayers are only subject to taxes in the Netherlands for certain categories of income from a Dutch source. (for example income from employment or property in the Netherlands).

Tax rates are the same for resident and non-resident taxpayers. However, there are differences in deductions, allowances and tax credits. Mostly in favor of the resident taxpayer. 

The main rule is: when a taxpayer does not qualify as a resident taxpayer he is a non-resident taxpayer. Non-resident taxpayers can, under circumstances, opt for a resident taxpayer status. The most important questions to ask are:

·        You are living abroad and do you have income in or from the Netherlands? 

·        Do you have possessions in the Netherlands? 

·        Did you not live in the Netherlands for the whole year?

By opting the non-resident taxpayer becomes a resident taxpayer. This means that he or she has to state its worldwide income in the Netherlands.


Double tax relief

Declaring your worldwide income in the Netherlands does not automatically mean that a resident taxpayer has to pay taxes over its income from abroad. When the right to levy taxes, over that income, is assigned to the other country(for example, via a Tax Treaty), the Netherlands will not levy taxes over that income.

In other words: to avoid paying taxes in multiple countries, the Netherlands will grant an income tax relief. this is called: double tax relief. This double tax relief can be found in tax treaties. In this treaties is agreed upon which country can levy taxes on what income. (for more information see our article about tax treaties).

Tax residence

Where a person has its tax residence is determined on the basis of the facts and circumstances. The following criteria determine a person's tax residence:

  • Where does the family stay;

  • Where do the children go to school;

  • Where do you work;

  • Where do you have a house;

  • Where are you registered;

  • Where are your hobbies/social life;

  • Where do you stay and for how many days?

This means that a temporary stay abroad does not automatically mean that a person is not a resident taxpayer anymore. When both countries want to tax certain income most tax treaties contain a tie-breaker rule. this rule determines which country relief their tax.

For more information regarding this subject please do not hesitate to contact us.

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