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Non-resident tax payer and the Dutch tax return

Not living in the Netherlands makes you a non resident, but you can still be liable for tax to be paid. This is possible when you work in the Netherlands or when you have a company with its base in the Netherlands. You are also regarded a non-resident tax payer if you own a house in the Netherlands or have at least 5% of the shares in a limited liability company in the Netherlands.

The non-resident tax payer is taxed differently than the resident tax payer and this difference is accepted as the situations cannot be compared with each other. To start with the tax rate. The income tax rate for non resident tax payers in Box 1 is 5,85% over the first € 19.645 and 10,85% over the following €13.718, instead of 37% and 42% respectively for resident tax payers. This is only under the assumption that you are not obligatory socially insured in the Netherlands. With the updated social insurance rules within the EU it is more likely you are socially insured in the Netherlands if you work in the Netherlands. Moreover, if you do work in the Netherlands while being a non-resident tax payer, you can reduce your Dutch tax burden with the days you were physically not in the Netherlands.

If you own real estate in the Netherlands that used to be your main residence, which you put up for sale and has been empty since you left, you can deduct the mortgage interest from the (nil) income in the tax returns after you left the Netherlands. This negative income will then be set off against previous years. This is possible for a maximum period of 2 years, but due to the crisis this has been increased to a 3 year period. From January 1, 2014 the situation will go back to 2 years.

In the event you own real estate in the Netherlands that cannot qualify for it to be your main residence, than you are due the Box 3 tax, currently 1.2%. Being a non-resident tax payer, not equal to a resident tax payer, you do not have the threshold amount of EUR 21.139 limiting the tax calculation, nor do you have the debt reduction of € 2.900. In other words, you pay the tax over the economic value of the real estate set by the county minus the debt related to the real estate. No reductions, no tax free amounts. The economic value set by the county can be subject to a limited reduction if certain criteria are met.

Owning at least 5% of the share capital of a limited liability company in the Netherlands, implies you are due the dividend withholding tax in the Netherlands of 25%. In the event you own a house in the Netherlands that is regarded a monument, you can set of 80% of the accepted maintenance costs against the dividend withholding tax in the income tax return.

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