Avoid double taxation!

You can’t prevent paying tax in the Netherlands but you should avoid double taxation! You only have to pay tax on your income and assets once. So what about your income from abroad? We will explain that in this article.

The double taxation agreement

If you live in the Netherlands and enjoy income from abroad, you must declare your worldwide income in the Netherlands. Your worldwide income is your Dutch income plus non-Dutch income combined. Please note: just because you state it in the Netherlands does not mean you have to pay tax on this in the Netherlands. This fully depends on the country your income comes from and the double taxation agreement with that country.

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Why do you have to declare your worldwide income? 

So, sometimes not everything is taxed in the Netherlands; but why can’t you just declare the income that is taxed in the Netherlands? That’s because your worldwide income determines the amount of:

  • your allowance;
  • the foreign health insurance contribution (Zvw);
  • the allowance from the Central Administration Office (CAK).

Resident taxpayer: Double tax relief

The Netherlands has not concluded international tax treaties with every country. To prevent paying tax in both countries, you can get double tax relief. This means that in the Netherland you are entitled to a deduction of the income tax due. One condition for the deduction is that you are a resident taxpayer.

Non-resident taxpayer

Are you a non-resident taxpayer or a qualifying non-resident taxpayer? Then you cannot get double tax relief, but you can ask for an exemption. When you fill in your tax return, you fill in your entire worldwide income. After this, you request an exemption for the amount that you did not earn in the Netherlands. It may sound a bit complicated; we explain it in the example below.

Example of a qualifying non-resident taxpayer

Imagine: you live in Germany and are a qualifying non-resident taxpayer (at least 90% of your income comes from the Netherlands). In Germany, you earn € 3,000, and in the Netherlands, your income is € 31,000, so your total income is € 34,000. You enter this full amount in your income tax return. The next step is to apply for an exemption of € 3,000.

Your specific situation

Your specific situation may be a bit more complicated than described in this article. This is because the Netherlands has a different taxation agreement with each country. In practice, it sometimes is complicated to avoid double taxation. That is why we recommend going to a tax advisor if you have income from multiple countries.

We are happy to help!

Do you have income in multiple countries and do you have questions about your specific situation? Or do you want help with your worldwide income return? We are happy to help! Please, contact us using the details mentioned below.

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+31 (0)20-2170120