Home is where the heart is. But for taxes, it’s where your ties are.
Key Factors determining tax residency
The Dutch Tax Authorities assess various factors to establish tax residency. No single factor is decisive; instead, a combination of circumstances is considered:
- Permanent Home: Do you maintain a permanent residence in the Netherlands?
- Physical Presence: Have you spent more than 183 days in the Netherlands within a 12-month period?
- Family and Social Ties: Is your immediate family residing in the Netherlands? Are you involved in Dutch social or cultural organizations? Where do you go to the doctor/dentist?
- Economic Interests: Do you work in the Netherlands or have Dutch bank accounts?
- Registration: Are you registered with the local municipality (gemeente)?
These factors collectively help determine your tax residency status.
Implications of being a tax resident
If you are deemed a tax resident:
- Worldwide Income: You're subject to Dutch income tax on your global earnings, including foreign income.
- Tax Benefits: You may be eligible for various tax deductions and credits available to residents.
Conversely, non-residents are typically taxed only on income sourced within the Netherlands.
Special Considerations
- 30% Ruling: Highly skilled migrants recruited from abroad may qualify for a tax exemption on up to 30% of their salary, subject to specific conditions.
- Dual Residency: If another country also considers you a tax resident, tax treaties between the Netherlands and that country will determine your residency status to prevent double taxation.
Need Assistance?
Determining tax residency can be complex, especially with international ties. If you're uncertain about your status or need guidance on your tax obligations, consult with one of our tax professionals for personalized advice.
