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Box 3 income tax – world wide assets and double taxation

The Dutch personal income tax system is divided into Boxes and in Box 3 you report your world wide assets. But if you already paid tax abroad, do you have to pay tax in the Netherlands again?

Based on the fact that your central point of life is in the Netherlands, makes you a Dutch resident tax payer. Resident tax payers also need to report their world wide assets in the Netherlands. If you have a British bank account, a house in Spain and stocks in your German bank account. This all needs to be reported in the Dutch personal income tax return and the outcome is taxed at 1.2% income tax.

Foreign bank account

If you have indeed a British bank account, then the UK inland Revenue already withheld income tax on your interest and dividends. Nevertheless you need to report your bank balance as of January 1 in the Dutch income tax return and the positive balance is taxed. However, you can claim in that same income tax return a double taxation relief for the exact amount of UK tax already levied over that bank account.

Property abroad

The house in Spain is taxed in Spain. All tax treaties also determine that the property is taxed in the country where the property is situated. That implies you do need to report the property in the Dutch income tax return, but for the exact same amount you claim a double taxation relief, as the property cannot be taxed in the Netherlands.

Stocks, shares, options abroad

The stocks in the German bank account might have been taxed already in Germany, but stocks, like a regular bank account are taxed in the Dutch income tax return. For possible paid German income tax you can make a claim for a double taxation relief.

Double taxation relief

The double taxation relief is indeed a relief, but not for 100%, with the exception of foreign property. The Dutch tax rates are different than foreign tax rates, hence it is not possible to have a full matching double taxation relief for interest etc already taxed abroad. At the same time double taxation is prevented as much as possible. A 100% avoidance of double taxation does imply you close the foreign account and bring the assets to the Netherlands.

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