Why report your foreign property when not taxed in the Netherlands?

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If you are a Dutch tax resident you need to report your world wide income and assets. Part of your assets could be real estate abroad. The rule is:

Property is only taxed in the country where it is situated

So why report this property in the Netherlands? The answer is simply, should you ever sell the property, then money is coming into your bank accounts and the Dutch tax office demands you to inform them where this is coming from. If you reported your foreign property and you claimed a double taxation relief for the amount, you paid not tax in the Netherlands over this property plus you can easily refer the tax office to your income tax returns for the explanation.

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Why is the tax office keen on non explained money flows?

The obvious answer is not reported income, or the so called black income. In a court case a Dutch tax resident was not that clever. In the period of 2009 to 2012 he purchased eight cars and paid cash for them. Moreover, he made cash money into his bank account. The tax office appealed is his income tax return that showed no income at all, for the amount of the cash being used plus 50% penalty.

This tax payer claimed to have made internet sales for friends that generated the money, but the tax office did not find that explanation plausible. By not reporting any of this income, the proof of the tax return being incorrect shifted from the tax office to this tax payer. Now the tax payer had to proof that the ex officio assessment of the Dutch tax office was incorrect. The court decided that this tax payer had not made his case, hence the estimated amounts by the tax office were regarded correct as was the 50% penalty on top.

Obviously I do not need to explain you that this person did everything wrong, but apparently it does happen.

Unexplained income from abroad

If you own property abroad which you had not reported and you sell it, money comes in which will trigger the Dutch tax office. We therefore recommend you to report this property, even though it does not result in taxation. Of course if you hold the 30% ruling, non of the above applies when you have chosen to be regarded a deemed non resident tax payer.

Orange Tax Services

We can assist you in filing your income tax return. We know about international legislation with respect to your Dutch filing obligations. Our fees are fixed at EUR 370 incl VAT for one income tax return. Feel free to contact us.