Certainly not. Work in Dubai and live in the Netheralnds is not wise. Dubai is tax heaven, the Netherlands is not, even though we are still very much excited about the Dutch tax system.
Work in Dubai and live in the Netherlands
A frequently asked question and is that wise? It certainly is not. Dubai does have much better weather and an even better tax rate of roughly zero percent. This attracts Dutch tax residents to work in Dubai.
How to prevent working in Dubai at 49,5% Dutch tax rate?
The thing about work in Dubai and live in the Netherlands, you are a tax resident in the country where you have your central point of life. Your central point of life is where is your family, your house, your car, where your navigation states home (really!), where you purchase your groceries. If you simply travel to Dubai without making changes and returning every other week, you pay Dutch tax over your Dubai income.
What acts like an anchor to the Netherlands?
An anchor to the Dutch tax system is both your tax partner and the house that is your main residence owned by you. That is a lethal combination if you no longer want to pay Dutch tax over your Dubai income.
The Dutch tax office has the opinion that the Dutch house that is owned by you and still used by you in which your tax partners is living, makes you a Dutch tax resident regardless. That is our experience from many battles we have had with the Dutch tax office about fiscal residence. Every time the Dutch tax office won from the other nation in such a situation.
If you want to move to another country to pay less tax, move to that other country to pay less tax. That is the message. That implies you cannot use your house as your main residence. The house as main residence implies a mortgage deduction.
That also implies your tax partner needs to move with you. Our experience is that never every tax partner is not willing to spend time in the desert for no money or tax credits.
I divorce my tax partner for tax purposes
That is supported by some hardline tax advisors. By divorcing your Dutch tax partner for tax purposes only, you can work in Dubai, and pay the Dubai tax rate. Of course you travel to your former tax partner, as you only divorced for tax.
We are more practical tax advisors. Does your tax partner also understand this is for tax purposes only? Or a cheap way to divorce. And if all is done formal, what will your tax partner hold back from a true divorce once your pension capital is displayed.
We think a divorce is not a tax solution and it could back fire to you more than the tax advantage.
We think tax-is-exciting, we understand many find it not exciting. The rule is, when you want the other nation tax rates, you need to move to that other nation. Often there is a reason for low tax rates, as there is more to life than only tax. Which we ofcourse will deny when asked, as tax is exciting.