Expat Life in Holland: Dutch Income Taxes

H2H asked a Dutch tax expert ten questions relevant to the expat community about personal income taxes in Holland. Read on to see what he had to say…

Dutch taxes for Holland expats

I recently spoke with Dutch tax expert Sander Suurmond, Senior Partner at Suurmond Tax Consultants here in South Holland, and asked him ten questions related to Dutch tax code and how it impacts expats living in the Netherlands.

H2H: You’ve been helping expat clients here in Holland prepare and file their income tax returns for 30 years. What percent of your business would you estimate is from non-Dutch speaking clients? Is this higher or lower (as a percent) today than it was back in the late ‘80s?

SS: I would say that our non-Dutch speaking clients have been a consistent 50% on average. Founder J.C. Suurmond had an international background himself and it was only natural for him to serve the non-Dutch speaking community in Holland when he started the company 30 years ago.  Today still most of our tax advisors have an international background and speak English fluently. This has a positive effect on understanding our clients and relating to them.

H2H: Can you tell us a little about the 30% Tax Ruling? Why and when it was first implemented?

SS: The first rulings of this kind were concluded shortly after World War II by the Ministry of Finance with individual U.S. companies, for projects deemed essential to the Dutch economy. Employees of such US companies could, if certain conditions were met, qualify for special deductions. This reduced the payroll bill for such workers which in turn improved the climate for establishing these (new) businesses. It offered a considerable advantage over the average Dutch resident, which has carried forward into the current 30% ruling. The ruling still exists to create an attractive tax climate for expats by compensating them for miscellaneous extraterritorial costs that are typically incurred. Think of additional costs related to travel, housing, tax advice, storage space, Dutch language courses, long distance phone calls, medical examination. Besides leaving 30% of your salary untaxed, you’re exempted from tax on income related to savings and investments, and can also exchange a non-EU driver’s license for a Dutch license.

So if you can, arrange things in such a fashion that the 30% ruling applies. For example, ensure you have signed the contract with your Dutch employer before you move to the Netherlands or delay registration at the local Dutch city council. The 30% ruling is an advantage that you do not want to miss out on. It is wise to seek tax advice early on. It is also important to have your tax situation well presented so that the Tax office grants you the 30% ruling.

H2H: I heard there is a maximum limit of 10 years an expat can qualify for the 30% Tax Ruling. Is that true?

SS: Actually, since 2012 the maximum period is 8 years instead of 10. To be precise, this counts for expats that arrived in the Netherlands in 2012 or later and qualify for the 30% ruling. If you arrived before 2012 the 10 years limit still counts. Periods in which you have lived and/or worked in the Netherlands will be deducted from these 8 or 10 years.

H2H: Do you often hear from your English-speaking clients that they had attempted to prepare and file their own Dutch income tax return, but then gave up because it ended up being too challenging?

SS: Yes, we do hear often that our English speaking clients have given up their attempt to file a tax return themselves. Or that they did file one themselves, but were puzzled when they found out they had to pay extra taxes because they filed it wrong. They then ask us to help out and correct it for them. With our knowledge of all possible tax deductions we have often been able to claim back tax. On our website we say “Getting adjusted to a different way of life in a new country will take some time. Becoming an expert in local tax laws and regulations in the Netherlands will take a lifetime”. This is because some forms are only available in Dutch, but even for Dutch people Dutch taxes are pretty complicated.

H2H: You offer free tax scans. Can you tell me about what that entails? Have you had many cases where you did find missed credits or allowed deductions, and were then able to file an amended return to get the overpaid taxes back?

SS: We go over the last tax return or do a scan on the available income figures and establish the fiscal due payment or refund. We have asked for many refunds successfully. One of the most successful cases was one in which a UK expat decided to have his tax situation checked after 5 years of working here and not receiving any tax forms. After filing these for the past years we were able to claim back € 25.000 for him.

H2H: Which event do you think had a bigger negative impact on the number of expats living in the Netherlands – the global recession that started in 2008 or the collapse of oil prices which started in 2014?

SS: I could not comment on this actually. We have not recorded any particular trend from any of these 2 events. We have a variety of clients in our database which keeps us busy in spite of global happenings.

H2H: Putting aside the implication of what it might mean for your business or other expat tax advisors, do you think it is a mistake that the Belastingdienst only operates in Dutch? For example, do you think if they were to operate in Dutch AND English, that it could increase tax revenue and lower delinquencies?

SS: In fact, the Dutch Tax service (Belastingdienst) offers information in English (as well as German and Turkish) on main issues on their website. When it goes more in depth, it goes back to Dutch only. It would certainly help if English was also used there, although without Dutch tax expertise it would probably not make any sense for an outsider. The tax forms that need to be filed are only in Dutch.

H2H: A lot of expats start entrepreneurial businesses in Holland. Some may be trailing spouses, others may be expats who want to stay after a work contract expires. What tax or business planning advice would you give to an expat who decides they want to start a business here in Holland?

SS: Start as a soletrader/ one man band (EMZ), not as a B.V.: less red tape, more fiscal advantages and flexibility. There is for example the starters deduction for the first 5 years.

H2H: Can you tell us about FATCA, what it is and which expats here in Holland it would apply to?

SS: People with US nationality have to pay US taxes, even if they are not living (and working) in the US. The IRS has requested foreign banks, among which Dutch banks, to report bank account information from US persons. This so called Foreign Account Tax Compliance Act (FATCA) has resulted in retail banks in the Netherlands to refuse applications for the most simple of investment accounts from US persons. It costs the banks too much effort to comply with the exhaustive reporting required by the IRS.

H2H: Last question for you. Can you give us a quick rundown of any major changes in the tax code this year that expats should be aware of when preparing their 2016 Dutch income tax return?

SS: We have made an end-of-year newsletter for our clients with tax tips and information for 2016. We are happy to share the information in it with your Angloinfo readers.

Thank you Sander for taking the time to answer questions about portions of the Dutch tax code which are highly relevant to the expat and international community living in The Hague, Rotterdam and throughout Holland.

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