(Qualified) foreign tax liability


If you are not resident in the Netherlands, you are generally a foreign taxpayer. Under certain circumstances, you may qualify for ‘qualified foreign taxpayer’ status. You can then take advantage of tax benefits such as deductions (including deduction of mortgage interest) and tax reduction for the tax part.

Foreign tax liability (limited/unlimited tax liability)

Do you not meet the conditions of a qualified foreign taxpayer? Then you are not entitled to deductions and tax reductions for the tax part. In this case, the tax authorities only charge tax on your Dutch income. This calculation does not take into account your income on which the Netherlands is not entitled to collect tax. Does your partner have little or no income? Then they will not get (part of) the general tax reduction paid out.

Not a partner for tax purposes

You cannot have a partner for tax purposes if you are a foreign taxpayer. This means that you only pay tax in the Netherlands on your own income in or from the Netherlands and your own part of your assets (property minus debts) in the Netherlands. For example, are you employed? Then your wages are your income. Does the property belong to more than one person? In that case, you pay tax on the part that you own.

Example:
You are married under community property. Together with your spouse, you have a holiday home in the Netherlands. You each own 50% of this flat. For the calculation of your tax, the 50% share of the value of this flat is therefore taken into account in box 3.

No entitlement to tax reductions and deductions

If you are a foreign taxpayer, you are usually not entitled to:

  • the income tax-related part of the levy reductions
  • the personal deduction
  • deduction of expenses for income provisions

deductions for social security contributions

Are you covered by compulsory social insurance in the Netherlands, such as for your AOW pension? If so, deductions and tax reductions are taken into account when calculating your National Insurance contribution.

Qualified foreign tax liability

Do you meet the conditions for treatment as a qualified foreign taxpayer? The tax authorities only charge tax on your Dutch income and any property you own in the Netherlands. This calculation does not take into account your income for which the Netherlands is not entitled to collect tax. This income is only relevant to determine whether you qualify.

Since 2015, as a qualified foreign taxpayer, you are only entitled to deductions and tax reductions if you meet the following conditions:

  • You are resident in an EU country, Liechtenstein, Norway, Iceland, Switzerland, Bonaire, Sint Eustatius or Saba.
  • You pay tax in the Netherlands on at least 90% of your worldwide income.
  • You can submit an income declaration from the tax office.

As of 2019, the tax part of the levy reduction will no longer be applied automatically for people who do not live in the Netherlands. To be able to claim this, you file a tax return at the end of the year. You can also apply for a provisional assessment during the year. For more information, click here.

Deductions

You are entitled to the same deductions as a resident of the Netherlands. But only if you or your (tax) partner is/are not entitled to them in your country of residence. The deduction items to which you are entitled are:

  • the negative income from your own home outside the Netherlands
  • the expenses for income provisions
  • the personal deduction

Do you have a tax partner? And does your tax partner have no income or a low income? If so, your partner can be paid the tax deductions. You can also distribute the deductions between you.

Conditions for qualified foreign taxpayers in a tax partnership

You and your partner are both qualified foreign taxpayers if the following conditions are met:

  • You and your partner reside in an EU country, Liechtenstein, Norway, Iceland, Switzerland, Bonaire, Sint Eustatius or Saba
  • You and your partner pay tax in the Netherlands on at least 90% of your joint income. This is only the case in the following situations:
    • You pay tax in the Netherlands on at least 90% of your worldwide income, and your partner has no or little income
    • You and your partner both pay tax in the Netherlands on at least 90% of your worldwide income
    • You and your partner can submit an income declaration from the tax office

Tax deductions

You are entitled to the tax reductions that apply in your situation. If you are covered by social security in the Netherlands, you are entitled to the contribution part and the tax part of the tax reductions.

Tax-free assets

Do you have income from savings and investments on which you have to pay tax in the Netherlands? If so, you are also entitled to the tax-free assets.

Making a declaration

To make a declaration, you need an income declaration form stamped by the German tax office. You can find the forms on the Dutch Belastingdienst website [tax office].

Further information

(Most of the text is taken from the tax authorities’ website.)