Incorrect tax form filed before deadline? – Fine?

A company is a source of income

There are different tax forms to file your annual income tax return with in the Netherlands, what if you file the wrong from? Will you get a penalty?

The incorrect tax form filed – what flavours do we have?

There is a limited number of tax returns tha can be filed in the Netherlands. The most common one is the P(rivate)-form. The tax resident is an employee or was an employee. The W (profit) tax return if the tax resident is an entrepreneur like a freelancer or ZZP. The C (non resident) is for a non resident tax payer that does have a filing obligation in the Netherlands. For instance for property owned in the Netherlands. The M (Migration) form is for a person that either arrived in the Netherlands or left the Netherlands. In other words started or stopped being a Dutch tax resident.  Then we have the F (final) form if the concerning tax resident has died.

A lot to choose from, what if you made the wrong choice?

Filled the incorrect form, what now?

In the Netherlands we have the obligation to file the income tax return before May 1. And if you have not been invited to file and you are aware you need to pay Dutch tax, you are supposed to file the tax return not later than 14 days after May 1.

What if you did your tax return online ticking the incorrect box for the sort of tax return. Like you chose P instead of W or M instead of C. Have you missed the deadline? The tax office would like to think so and will impose a fine of EUR 385 (2021). The court disagreed.

Court case

A former Dutch tax payer moved to Israel. She was asked to file for the year 2017 the  migration income tax return (M form). She was reminded on April 30, 2019. As a result she filed early May 2019 a non-resident income tax return (C form). That is not the correct form. She was reminded again in November 2019. As she had the opinion to have filed the tax return, she did not respond anymore.

The tax office imposed the EUR 369 penalty for not filing in time the income tax return. The lady made a complaint and asked for reimbursement of costs made related to the complaint. The penalty was deleted, but the compensation not granted.

Incorrect tax form filed before deadline? – Fine?

The lady went to the higher court to complain for not getting a compensation. The tax office argued that the tax return was send to the lady to her Israeli address. The tax office could not substantiate to the court if that was in fact the migration income tax return.

The reminders did not show which tax return was supposed to have been filed. The reminders are general reminders, not specific to what is actually expected to be filed.

The court could not rule any different that the lady filed in time a tax return. That implies no penalty for not filing in time could have been issued. The fact that the tax office does not communicate in their reminders what exactly it is the tax office would like you to do, is the risk of the tax office. No penalty for the lady and she is entitled to compensation of costs made.

Tax is exciting

We think tax is exciting. We are excited about this court verdict. Indeed, the tax office sends a random reminder. If the reminded person contacts with us, we need to find out via calls what it is the tax office expects. Even then we something are informed incorrectly about the type of tax return that is expected.

That said, if you know that the Migration income tax return (M form) cannot be done online and the non-resident tax return (C form) can be done online. We understand the lady of the court case did the best she could within the limitations of possibilities. Maybe she could have emailed us to assist her with the reminders, that would have been exciting!

My name is Kelly and I am excited to file your correct tax return to prevent a penalty.

No penalty

Entrepreneur leaving the Netherlands (for good)

Entrepreneur leaving the Netherlands

The entrepreneur leaving the Netherlands, does that have tax implications? Is it simply leaving, or are obligations to take care of before and after you left?

Entrepreneur leaving the Netherlands

An entrepreneur in this respect is a person either owning a one man company, or ZZP company or freelance company. However, an entrepreneur can also be a sole shareholder of a BV company.

Entrepreneur leaving the Netherlands -self employed

The entrepreneur leaving the Netherlands being a one man company needs to terminate the registration of the company with the Chamber of Commerce. A one man company is a transparent company. It is not a vehicle, cannot accept commitments itself. Hence the moment the entrepreneur moves away for good, the company needs to be terminated.

Emigrating from the Netherlands is made official by visiting city hall a few days before you leave. Important is to provide your new foreign address details to the city hall. City hall will update the Dutch tax office with these details.

Why is it important to provide your foreign address details

The company is deregistered at a certain date. Then still, even if you left, the Value Added Tax return for that period and often some following periods need to be filed. If you forget to file you get a penalty and an ex officio assessment is imposed. Such an assessment needs to be solved.

Entrepreneur – sole shareholder director BV company

The BV company is a formal entity. Nevertheless, the same rules apply. A BV company is only a tax resident in the Netherlands if the director of the BV company is a Dutch tax resident. If you leave the Netherlands, but the BV company remains as it is. You need to appoint a Dutch tax resident as director to avoid the BV moving with you to the other country.

Entrepreneur leaving the Netherlands (for good)
Entrepreneur leaving the Netherlands (for good)

Trust companies

Trust companies are companies you might have learned about in the news. They facilitate large multinational companies in the Netherlands with the position of director. They act as if they are the director to make the BV company a Dutch tax resident.

This service is challenged by the EU. This is a rather expensive service. Please try to find a relative or friend to act as director while you move away. But you need to inform that person also about the director liabilities. That might make them not accept the position.

Tax assessment

The moment when you, the shareholder of your BV company, move away, the tax office will impose a tax assessment for you. You have appointed a local director, why a tax assessment?

While you generated profit in the Netherlands, this profit was stored in the general reserve on the balance of the BV company. If you take out this profit, you pay 26,5%( 2021) dividend and income tax combined.

To avoid you taking out this general reserve amount while you reside in another country, the Dutch tax office already imposes the full amount of tax obligation to you when you leave the Netherlands. This tax amount is not to be paid. The tax assessment is valid the rest of your life, which use to be 10 years.  Dutch turned out to have patience after all, as some waited the 10 year period and then cashed at no tax the profits.

The moment you sell the shares of the BV, terminate the BV, put the shares to usufruct or cash the money, that is the moment you are to pay the assessment. The tax office will start a collection procedure.

Dutch (business) bank account

Banks operating in the Netherlands are under instruction of the national bank. The national bank has instructed banks not to facilitate bank accounts for companies of whom the owner/shareholder is not residing in the Netherlands. We can only assume that this is done from a money laundering point of view.

In other words. We have experienced the bank inquiring with the tax payer living abroad, about him or her living abroad. In response to the answers given – living abroad – the Dutch bank account was closed. Business or private.

Doing business without business bank account is not possible. The bank has not empathy to possible reasons why you are no longer living in the Netherlands. Rather rigid execution of the rules. FYI.

Tax is exciting

We think tax is exciting. Thinking constantly about Dutch tax while living abroad is not exciting. If you move away from the Netherlands for good, we have the humble opinion that you should wind down your business activities before you leave entirely. That gives you peace of Dutch tax mind while living the dream abroad.

Migration and contact details

One man company bookkeeping

Migration and contact details go hand in hand. The day you leave the Netherlands to start your fiscal residence elsewhere implies you have new contact details. What if you do not share them?

Migration and contact details

We understand that leaving the Netherlands without a new forwarding address implies no surprises from the Dutch tax office while living abroad. That said, often the migration results in a nice surprise.

Moving house is always a stressful moment, moving house to another country might as well be double stressfull. Some formalities you need to comply with and one of them is to deregister from city hall. City hall will probably ask you about your new address details and of course you can reply “I do not have any yet.”

No new address details

City hall is the only organization that updates the Dutch tax office about your contact details. The consequence of not providing new address details is that the tax office will not process a possible tax return filed.

You might be joyful, as you expect tax to be charge to you. The migration income tax return is often about too much tax withheld by your employer. The too much tax amount is refunded to you via the migration income tax return. If then your address details are unknown, the amount is not paid out to you.

Family address

If you truly move abroad and you have a temporary address, but that you can only use for a very limited period of time, we understand you do not provide these temporary details. In such or similar situation we recommend to provide the address of your family to city hall. Even if that is an a totally different country. With such a solution the tax office can still contact you or process your migration income tax return.

Moving while already living abroad

The Dutch tax office does not expect you not to move from the address you provided while you left the Netherlands. You can update your foreign address with a new foreign address. That is best done in a letter to the tax office at the foreign department in Heerlen.

Migration and contact details
Migration and contact details

No address – what can happen to me?

Not everybody is eager to provide address details. Some even think the Dutch tax office cannot affect them abroad. Well they can. We have a case in the office where a person moved abroad without providing contact details. The person still owned and rented out a property in the Netherlands.

The Dutch tax office issued for a period of a number of years ex officio assessments for not filed income tax returns. Income tax return for the year she left but also for the years the Dutch property was the only tax aspect in the Netherlands. You can own a property and have for the same amount a debt on the property, hence no tax is to be paid. If this debts is not claimed in an income tax return, the Dutch tax office simple issues the tax return based on the value known to them. This is the so called WOZ value. Then suddenly tax is to be paid.

Selling the property

Obviously the tax payer does not receive any of the assessments and there comes a moment the Dutch tax office no longer waits for their money. They are going to touch the property. You can have mortgage on the house, the Dutch tax office can still act on selling the property for what they find suitable to settle the outstanding tax amount. This is not a process done overnight, many collector letters will be presented at the address of the property.

The tax office prefers not to sell, but to get the tax payer to learn about these issues. Tax collectors have their ways to make the tenant feel uneasy, and the tenant will be able to get into contact with the landlord, the tax payer. That is often the moment the first contact is made with the tax office and the long process of solving the ex officio assessments starts.

Blocking bank account

In another situation a person that never should have had a Dutch income tax return, certainly not an assessment. His Dutch bank account was blocked by the Dutch tax office. This person worked as a criminal defended lawyer for the International court of justice in The Hague. These persons are exempted from taxation in the Netherlands.

Entry visa obstacles made the lawyer being late for every single trial. The court was not amused by this procedure and created a solution. However, this solution trickered the issue of a Dutch tax number for this person, without him being informed. Seven years later he opened a Dutch bank account and that was instantly blocked by the Dutch tax office.

This person was at good faith, hence we could solve everything, even back to 2013. If you are not at good faith, so you left without forwarding details, the Dutch office can and will seize your Dutch bank account.

Tax is exciting

We think tax is exciting, others think different and are glad the tax office cannot contact them. Must sound ideal, reality is different. The migration income tax return, that is the tax return filed when you move away or to the Netherlands is often a tax refund tax return. If the tax office has no contact details, no refund is paid.

In the situation you are to pay tax and the tax office does have your contact details, this can become ugly. Maybe your Dutch property or bank account is touched. Or what happens when you arrive at Schiphol airport the next time?

Income tax return – what types

income tax

The income tax return, what types are there you might wonder, what are my obligations, what costs can I deduct?

Types of income tax return

We have the regular income tax return (P), the entrepreneurs income tax return (W), the non resident income tax return (C) and the migration income tax return (M). We also have the F tax return, F stands for finished or deceased.

What return you need to file is set ready by the Dutch tax office. If you have registered a company your P form will be denied, as that should have been a W form. The same when you migrated, then you need to file a M form and your P or W form will be denied.

What are my obligations?

One of your obligations is to file an income tax return if one has been issued to you. Some people request for the 86 page in solemnly Dutch printed tax blabla Migration income tax return. If issued to you, you need to file, even if you regret your invitation, as the outcome is for instance zero.

Income tax return
Income tax return

The penalty for not filing in time is EUR 369. Before that penalty is issued to you, you will be reminded a number of times.

Should you not have been invited to file, then you are obliged to file a tax return yourself not later than 2 weeks after the official deadline of May 1 if you know you are to pay income tax. You know that you are to pay income tax if you had a labour income source not being employment or self-employed. An in between kind of income.  You are to file an income tax return if your worldwide assets exceed the threshold amount of EUR 100.000 (2021).

We understand you might be an international that does not know the rules. Most Dutch do not know the rules, but you are ought to know the rules. Hence this obligations can be put on you.

What can I deduct?

Not a lot, simple as that.

Mortgage deduction

We have a mortgage deduction, which implies you can deduct the costs of the loan taken out to purchase the house that is your main residence.

Study cost deduction

We have a study cost deduction, which implies that you can deduct study costs made for an improvement of your economic situation. The costs need to have been made during your stay in the Netherlands and paid by you, not being compensated by an employer to you. The repayment of a study loan is not a deduction. It is about the actual study. This study cost deduction terminates as per December 31, 2021.

Charity donation

Charity donations made to a charity organization recognized as such by the Dutch tax office.  The threshold is 1% of the combined income as minimum and 10% as maximum. No minimum threshold if the donation is done by notary deed for at least a five year period.

Pension payments

Pension payments, in Dutch lijfrente, could be deductible. However, if your employer already has a pension arrangement with you, you cannot deduct for the value that pension has increased. That value is translated in a so called A value. That A value determines what or if you can deduct any of your private made pension payments.

Alimony costs

Alimony costs to your ex-partner based on court agreement. Condition is that you can provide details of your ex partners such:

  • as tax number and or
  • address details,
    as the alimony deducted on your side is taxed on your ex partners’ side. Alimony paid for children is never deductible, as children always cost money, separated or not.

Tax is exciting

Tax is exciting and we get excited about filing your tax return. You might not share our excitement about filing a tax return, but we try to make the process more pleasant for you by using fixed fees. We have a fixed fee for the regular (P), migration (M) and non-resident (C) tax return of EUR 390 incl VAT including possible tax partner (2021 rate) and EUR 550 plus VAT for the entrepreneurs income tax return (W) (2021 rate). Feel excited to contact us!

Last call for: 2015 income tax return

FD_Gazellen_2020_logo-s-wbg

Until the end of this year the 2015 income tax return can still be filed. Have you claimed your tax back? Do not be too late.

Last call for: 2015 income tax return

In the Netherlands you are either invited by the Dutch tax office to file a tax return. Also are ought to know you need to file the tax return. In both cases often you are due income tax.

In a situation you could maybe claim back tax you are not always invited to file. The tax office states that you can go back max five years to file the income tax return. Currently it is November 2020, hence you can file 2019, 2018, 2017, 2016 and 2015 if not done already.

Last call for: 2015 income tax return

Why file the 2015 income tax return?

If you arrived into the Netherlands or your left the Netherlands during the year 2015 you could have had Dutch employment. The Dutch employer withheld wage tax on your income.  While tax was withheld, you arriving or leaving was not taken into account. Hence too much tax was withheld.

That is a reason for filing. Other reasons:

Or you did a study and you assume you claim the study costs in the year you actually had income. That is an incorrect assumption. You deduct the study costs in the year you paid them. The negative tax base is then rolled forward to later years where you did have money. The negative tax base is then set off against the positive an you have a refund.

When you forget to claim the 2015 study costs, it cannot be deducted at all anymore.

The non working spouse refund was maybe never claimed. When one partner works and the other does not, the non working partner can have a tax refund. That could still be claimed.

If both partner work and you have a child, then a substantial tax credit can be obtained, as the Dutch Government likes to support such couples.

Tax-is-exciting:

We will be glad to assist you. We start with checking if you are entitled to a refund. That we do for free. If you like to file the income tax return, we charge EUR 390 incl VAT incl possible tax partner. The deadline is December 31st. I hope you understand that contacting us after Christmas might be a little too late, so please contact now.

Sorry for the dashes in the middle of the word tax-is-exciting. Apparently Google has a dirty mind and sees only a three letter word that we refer to when we practice to reproduce ourselves. Anything related to that word is spam, hence this devout solution.

I want to be: no tax resident in NL

No tax resident in the Netherlands, who does not want to be a foreign tax resident in the Netherlands. Well, I want to be a Dutch tax resident, but then again, I actually think tax is exciting. However, my opinion is not shared by everybody, but my fan base is growing.

No tax resident in NL

The desire to be no tax resident in NL and at the same time residing in the Netherlands and use all the facilities the Netherlands offer, can be a dream. Dreaming is ok, but reality is the opposite. The determination of you being a tax resident or not is set by facts and circumstances.

Facts and circumstances determine your tax residency

Facts are clear. You live at a Dutch address, you work with a Dutch employer, you purchase your groceries with the Albert Heijn. You are a Dutch tax resident.

Circumstance are less clear. You have a foreign address, but your wife and children live here. They attend school and do their shopping in the Netherlands. Or you have multiple houses, none rented out, but the Dutch house receives all the mail, has the high heating invoices etc. A Dutch address in your navigation is labelled as home address. Indeed scary and silly, but was part of a court case.

no tax resident in NL

no Dutch tax resident  – court case

The shareholder managing director of a hobby and collectors packaging company – no idea what that is – claimed not to be a Dutch tax resident. The Dutch tax office challenged that statement and started an investigation.

The Dutch tax office requested for all of his bank statements and the bank statements of his wife. Both Dutch and Luxemburg bank statements. Moreover, the tax office asked for the print out of the current account he has with his company. A current account is the bookkeeping ledger in which private spending is booked. That is something the shareholder needs to pay back to the company.

Telephone invoices, emails he send and his business partner send during the period of 2013-2015. The personal asset overview starting from 2003 was requested for.

The shareholder made a complaint against the size of information requested, to which the tax office agreed, so only information with respect to himself he only needed to provide.

The court decided as follows

The shareholder also appealed against this information request and went to court. The court ruled that the shareholder does have a Dutch address, a number of cars with Dutch license plates, a number of Dutch telephone numbers and was very active flying in and out of the Netherlands. Moreover, his economic ties with the Netherlands were very strong. I assume the company was based in the Netherland.  And the shareholder spend quite a few longer periods in the Netherlands.  The court had the opinion that the information requested by the tax office would indeed make it possible to determine whether the shareholder was or was not a tax resident in the Netherlands.

Denied by the court was the claim of the shareholder that the size of the information requested was out of proportion. The court denied the claim that the principle of prudence was harmed. The court denied the claim of detournemnet de pouvoir (misuse of power by the tax office). And the court denied the claim of fair play.

The court ruled that what the tax office asked for is reasonable to determine the tax residency.

Tax is exciting

In my opinion, if you have nothing to hide, no need to go to court to stop the tax office asking so much information. I do agree the tax office asks for a lot of information, but then again, the shareholder his life was made a bit complex to rise a possible smoke screen tax wise.

Bottomline, tax residency is determined by facts and circumstances and exactly that was exactly what the tax office was doing in this court case. Collect the facts and take into account the circumstance.

If you have a doubt whether you are or are not a Dutch tax resident, please contact us and we work with you to see what is the case.

M Form where M stands for Migration

OrangeTax caters for US expats income tax return too

If you move your residency from or to the Netherlands, you will be asked to file the M Form or migration income tax return. What is that about?

M Form

Your Dutch tax residency starts when you arrive in the Netherlands and stops when you move your central point of live out of the Netherlands. This process is monitored by the Dutch tax office via the City hall registrations.

If you register with city hall, chance is you will be invited to file a tax return. And that you can be excited about, as if you were employed, your employer can only assume you were be a tax resident the full year, so most likely too much tax was withheld, which you can claim back using the M Form.

If you deregister from city hall, the same applies, also most likely a refund. A fun from to file, or is it?

M Form

M Form – do it yourself

If you obtained your digital ID, then you can log on to the website of the tax office and there the tax office set ready your tax return. Your google translate will show you that the tax office only asks you to press YES.

But mind the small print.

Of course you disregards the small print as that is all yaba yaba in Dutch, and you feel a happy bunny having filed your own first tax return yourself.

But then…some weeks later you receive a message stating that the tax return your filed was the incorrect tax return. So you did exactly as you were told, and still it is wrong. That is because you cannot file the M form digitally and with the letter you are send two 86 page in full Dutch booklets for you to complete.

What was the small print about?

The small print states that the tax office has indeed set ready for you the tax return, but that it is your responsibility to make sure the correct form is filed and all details have been included. If you hold the 30% ruling, the tax office included too much details. If you do not hold the 30% ruling, are your world wide assets included? Probably not.

Can the tax office issue a penalty for using their tax return and it still being incorrect? Yes they can.

M Form – have us do it for you

The M form is a technical form that cannot made less complex as it simply is a complex issue. You move country, you are taxed for a limited period. Social premiums are involved and your world wide assets are taxed for the period you were a resident. Double taxation is in place for foreign property and if conditions are met, your non working spouse can pro rata receive a refund.

Tax is exciting

The M form makes us smile as that is nearly always a very nice form to be completed as it results in a refund. Our fee to file that for a regular tax payer is EUR 390 incl VAT incl tax partner. If you are an entrepreneur our fee is EUR 550 ex VAT incl tax partner.

If you are an employee and you arrived some where around the middle of the calendar year in the Netherlands, chance is likely that your refund is easily exceeding our fee.

Sometimes the M Form is not simply something to claim tax back. If have the US nationality, you need to file a US tax return, regardless where you are a tax resident in the world. The local tax return is the basis of the US tax return. Then you need the M form regardless. If you need help with US tax returns, we can bring you in contact a very good US tax prep person.

2019 income tax return

2019 income tax return – exciting times! We are so excited we might be able to assist you again claiming back some tax.

2019 income tax return – who needs to file?

The Dutch tax residents that requested a refund for the house obviously need to file the 2019 income tax return. If you do not, you need to pay back the refund.

The Dutch tax residents that only have had 1 employer in 2019, no house, no assets, most likely are not invited to file and if they do file, the outcome of the tax return will be nil.

If you had two or more employer in 2019, most likely the Dutch tax office invites you to file to see if enough tax was withheld.

The Dutch tax residents that have assets exceeding EUR 30.360 a person and EUR 60.720 for  a tax couple, are to file the Dutch income tax return and need to report the WORLD WIDE assets.

However, if you have the so called 30% ruling no assets need to be reported. That said, if you use the tax return the Dutch tax office set ready for you, the Dutch tax office automatically chose for you that you DO NEED to report your worldwide assets. So better not to use that possibility if you have the 30%  ruling.

2019 income tax return
2019 income tax return

The Dutch tax residents that are registered as entrepreneurs with the Chamber of Commerce need to file a profit tax return.

The persons that arrived or left the Netherlands need to file a migration tax return. That said, those who are entitled to a refund are often not invited to file, best is to ask us to check if you can have money back (no charge). If you then can have a refund exceeding our fee of EUR 390 incl VAT, we recommend you to file.

2019 income tax return – what are our fees?

Our fees for the regular income tax return are EUR 390 incl VAT including your tax partner.

Our fees for the migration tax return are EUR 390 incl VAT including your tax partner.

Our fees for the entrepreneur income tax return are EUR 550 excluding VAT including your tax partner. We do assume either we already processed your administration or you provide a balance and profit and loss overview.

2019 income tax return – why use our paid service?

Indeed the Dutch tax office has set ready your 2019 Dutch tax return for free. You only need to push yes to file. The small print does state that you do need to check if what is included in the tax return is indeed correct. That the tax office does not take responsibility and if the income tax return turns out to be incorrect, penalties will be issued to you.

How wrong can they be? If you have a simple life with your family, employment and no assets, you can accept this tax return. Our clients have no simple life, they are internationals with at least bank accounts abroad, often property abroad,  the Dutch tax office has not included in the income tax return. The penalty of not reporting the world wide assets correctly is 300% of the tax due.

Then again, most of our clients have the so called 30% ruling and that is not covered by the tax return set ready of the Dutch tax office.

Despite our claim we actually think about your tax return, we offer you a human being (us, excited tax advisors) to whom you can ask about, protest against, share your tax issues. We process a lot of tax returns and there is hardly any message that does not contains a question. Our core business is of course ‘I have a short question’ afraid we start the hourly rate. But short questions are part of the deal.

Then after the tax return is filed the tax office sends assessments which we are happy to receive and examine. Or the tax office sends an inquiring letter which we will be excited to process. Or the tax office denies you a tax aspect, which we will be glad to appeal.

Orange Tax – Tax is exciting!

We do think tax is exciting and we can hardly wait to start processing your income tax returns.

In order to be able to complete your 2019 personal income tax return, we would like to receive the following information:

  • Your 2019 annual  income statement from your employment;
  • If applicable your 2019 annual mortgage statement;
  • Study costs paid in 2019 exceeding the amount of € 250;
  • The 2019 preliminary refund assessment received early 2019 or the actual refund amount received from the tax office per month, if possible, but very important.
  • If you own more than € 30.360 (tax free amount) in world wide assets, please provide us with all bank balances, shares/bonds assets and real estate assets valued as per January 1, 2019. For tax partners the tax free amount totals € 60.720 instead of € 30.000. 30% ruling holders do not need to provide any of this information.

Please forward the collected information preferably in PDF per email to info@orangetax.nl or via regular mail to P.O. Box 75524, 1070 AM  Amsterdam.

We would appreciate it very much if you would give us an explicit permission from a privacy point of view that we can process your details. This needs to be done for every tax return, so if you have completed this already last year, please do again this year. This permission you can grant via this link: https://www.orangetax.com/handling-agreement/

The rule of the tax office is: if filed before April 1, you receive the (refund) assessment before July 1. The regular deadline is May 1. If you meet this deadline instead of April 1, then you are still in time but it could take about a year before you receive a response from the Dutch tax office.

Our fee for the services of the filing of the personal income tax return is € 390,00 including VAT.

Emigrating from the Netherlands – you can remain a Dutch tax resident

Tax is exciting, sometimes too exciting and this topic is one of those moments. Emigrating from the Netherlands and staying a Dutch tax resident. What is that about?

Emigrating from the Netherlands

You would assume that if you leave the Netherlands physically to live and work abroad, and you even deregister from the city hall in the process, that you have become no more Dutch tax resident or at the minimum a nonresident tax payer. Unfortunately that is not always the case.

We are experienced international tax advisors and we have a clear view on the situation.

You leave the Netherlands, you call the Dutch tax office and you ask “If I leave the Netherlands, will I remain subject to Dutch tax on my income while I live abroad? “ And the answer will be “Of course not” stated by the tax office. That is what we are told many times. But this is not the correct answer. Then we are in the situation where we inform the client differently from the Dutch tax office and the client thinks we are wrong. But we are not.

Emigrating from the Netherlands
Emigrating from the Netherlands

What is the case?

Emigrating from the Netherlands and remaining a Dutch resident tax payer sounds like a conflicted sentence, but it is not. Your fiscal position is determined based on y our central point of life. Yes, you can move away. Yes, you can have employment abroad, but if your partner stays in the house you and/or your partner own, you have not moved tax wise.

In the situation you are married and you deduct the mortgage interest of the house you own, then you are regarded tax partners. When one of the partners leaves the Netherlands, then the marriage in combination with the house makes you remain a Dutch resident tax payer. Regardsless who of you actually owns the house.

Case from our practice

A Scandinavian woman was married with a Dutch man, they purchased a house in Amsterdam and the marriage did not work. So without getting a divorce the Scandinavian woman moved away to Norway where she picked up university and worked for a Swedish airline.

You would assume that her central point of life clearly moved away from the Netherlands. The Dutch tax office disagreed. The marriage in combination with the house owned by the couple made her a Dutch resident tax payer. We had to redo the tax returns of the past couple of year. The standpoint of the Dutch tax office was so strong, they had no effort to convince the Norwegian tax office to withdraw their claim.

This is only one case of many we experienced with the same outcome.

Emigrate from the Netherlands – divorce

A divorce would make you disconnected from the partner you leave behind in the Netherlands. However, if you go for a divorce only for the reason to stop being a Dutch tax resident, does your partner trust you that is the true reason? No, of course not. Hence your partner agrees with the divorce but will fully use his or her rights to make a claim on alimony etc. Because the tax reason could be a smoke screen for the new love bird that is also living abroad?

Remaining a Dutch tax resident – is that a problem?

When you move abroad to work abroad while you stay a Dutch tax resident due to your marriage and the house you own in the Netherlands that is the main residence of your partner, is that a problem? We do not think so. Yes in the year you move and you have mixed Dutch and foreign income, you pay additional income tax. In the following years where you have only foreign income, you receive a 100% double taxation relief in the Netherlands and you are only socially insured in the country where your employer is situated.

Actually it is a positive thing, because you both are regarded a Dutch tax resident, the remaining partner, with income that is, can decide to fully deduct the mortgage interest. Whereas in case of the leaving partner no longer being a Dutch tax resident max 50% of the mortgage costs can be deducted.

Orange Tax Services – tax is exciting!

Before you run off to the desert to work in oil at no income tax at all, contact us to make sure you are not the fool that is thinking to work tax free, but will be hit with 49% income tax when the Dutch income tax is filed. Yes we disagree with the initial response the Dutch tax office gives you, yes we are right, but that does not need to be a problem.

Your address abroad – keep in touch with the Dutch tax office

Your address abroad plus the phrase keep in touch with the Dutch tax office could make you do the opposite, is that wise?

Your address abroad

If you have been a Dutch tax resident or a non resident tax payer, it is important the tax office knows about your movements. You might disagree and not to be too bothered by updating the Dutch tax office as you can do without those silly blue envelopes. This attitude can costs you more than you can anticipated.

Your address abroad – update if you move

We understand the Dutch tax office is not on your short list for Christmas cards, but it needs to be on your short list for when you send out new details of your new address as you have moved.

Your address abroad – court case

A Dutch tax resident Mr X moved to Germany in 2002 and deregistered with city hall. He did not provide city hall his new German address details. In the year 2011 the Dutch tax office send out invitations to file his 2008 to 2011 Dutch income tax return. During the period March 2011 to September 2012 the Dutch tax office send out reminders and other notifications. To none of these messages Mr X responded.

The tax office does not like it too much when you do not respond to their requests, but for situation like these they do have a solution. The Dutch tax office simply issues tax assessments for amounts they think the tax payer should pay them. These amounts are always higher and then the actual amount due, to trigger the tax payer to respond, file and comply with rules and regulations.

Mr X responded too late to all assessments, the tax office denied him to appeal the ex officio assessments, hence Mr X went to court. The court was quickly done with Mr X. Yes, the Dutch tax office needs to issue an assessment that meets all the criteria that has been set to issuing an assessment. However it is Mr X and only Mr X that can provide the Dutch tax office with his foreign address. And if Mr X moves to a different address in Germany, as he had done, it is not the task of the Dutch tax office to check with every county in Germany if maybe Mr X is living there. So Mr X had to pay the tax.

Your address abroad
Your address abroad

Your address abroad – court case – what really happened?

The above court case might be a bit strange to you. If you leave the Netherlands in 2002, how can you then be asked to file a 2008 to 2011 income tax return. And if Mr X has not responded all these years, how come he did now, in 2019?

The case does not provide any information of why tax was due. To us that can all be caused by one reason: a property in the Netherlands owned by Mr X. If you own a property in the Netherlands, you are due income tax over the difference between the so called WOZ value, value determined by the city, and the debt taken out to purchase the house.

For tax years 2008 to 2011 apparently the Dutch tax office actively asked him to file a Dutch tax return. As no foreign address details were provided to city hall, these invitations, reminders, ex officio assessments, fines, collecting fees were all send to the address the Dutch tax office does know, being the address of the Dutch property.

Still no response.

The next step of the Dutch tax office is to sell the property in order to settle the outstanding tax assessments. And then the notary needs to contact the owner, the notary was successful in locating Mr X and that is how Mr X started to respond, but way too late.

Orange Tax Services – tax is exciting

When you leave the Netherlands you need to deregister with city hall. Only City hall can update the Dutch tax office about this fact and only City Hall can provide your foreign address to the Dutch tax office .

The year you leave the Netherlands you most likely need to file a migration income tax return, we can do that for EUR 390 incl VAT by the way, hence providing an address is vital. If you are not sure of an address, use your parents address or that of your children, friends, family. The moment you move again abroad, you need to update the Dutch tax office (the foreign office in Heerlen) about your new address details.

You might not like receiving mail from the Dutch tax office, but as you have read in the court case, not receiving mail at all from the Dutch tax office is worse.

We love to receive those blue envelopes, so if you do not want to be bothered, send us a scan and we see what we can do for you to meet your obligations. Tax is exciting!

Arrived and or left the Netherlands, income tax refund?

You arrived from abroad into the Netherlands the one year and the other year you leave from the Netherlands to live abroad again. Can you get a tax refund?

Migration income tax return, or income tax refund?

The Dutch income tax return that is due for arriving or departing the Netherlands is referred to as the migration income tax return. Or the M form. Migration stands for you moving your central point of life in or out of the Netherlands.

Can you expect an income tax refund?

Often you can. How is that possible? Privacy rules forbid the employer to know about your private life. Even though the employer might have attracted you from abroad, or you simply told your employer or your employer knows you leave to return to your home country. The payroll system cannot take this information into account.

Hence the payroll system calculates the wage tax withholding based on you working in the Netherlands the full year. If you earn EUR 80.000 gross a year, then part of your monthly salary is the tax rate of 52% to avoid you being due income tax at the end of the year. If you then decide to leave the Netherlands after three months, you earned EUR 20.000 which is in the 37% tax bracket. The employer withheld 52% and you are actually due 37% income tax. That is how the income tax refund is being created.

Can I always have an income tax refund?

That depends. If you arrived in January or left in December you are so close to the start and end of the financial which equals the fiscal year, that we expect nearly no refund.

Can I be denied an income tax refund?

Yes you can. Your central point of life determines where you are a tax resident. If you move that point by going to another country, you are migrating your fiscal position. The Dutch Government uses a tool to determine whether you are arriving or departing from the Netherlands and that tool is City Hall. The moment you arrive you register with city hall, the moment you leave you deregister with city hall.

Can a Migration form be denied to you?

Yes it can. If the system does not see you migrating, no migration income tax return is issued to you. This is possible when you forgot to deregister when you left the Netherlands. Can this be solved? Yes we can solve this for you, but it is not a quick fix.

M form online?

The M form is a dragon of a Dutch language form, which you cannot do online. We do experience many expats to have filed online tax form that the Dutch tax office set ready for them, assuming this would be the M form. The assumption is made on the basis that you have either registered yourself or deregistered yourself with Dutch city hall, hence you assume the tax office knows you are due a so called Migration income tax return.

Income tax refund
Income tax refund

That assumption we can understand, but that is also exceeding the ability of the Dutch tax system. The tax return ready for you is not an M form. If you file this income tax return, it is being denied by the Dutch tax office. Consequently the Dutch tax  office issues to you the 86 page Dutch tax from to be completed.

The problem with this form is not only the language, not only it being a dragon, but also that there has been set a timeline in which the tax office expects you to file this income tax return. When the deadline is missed, you are not immediately issued a EUR 369 penalty for being late. The tax office does have some sympathy for you being asked to complete this form. But do not push the tax office patience too long please.

M form online? Yes we can – and we are very much excited about filing the M form!

The difference between you, the tax payer, and us the professional registered tax advisor is that we can file the M form online with the Dutch tax office. We can even present you a version in the English language so you understand what is being done in that tax return.

Orange Tax Services – Tax is Exciting!

We are pleased to inform you that we can file your migration income tax return for EUR 390 incl VAT. Your tax partner is included in the fee. Only if you were an entrepreneur in the Netherlands, you need to file the profit migration income tax return and that we charge at EUR 550 ex VAT instead, still your tax partner is included in this fee.

Incorrect tax assessment, what to do?

You filed a tax return and the response on that return is an assessment. What if that is an incorrect tax assessment, what to do?

Incorrect tax assessment

If you file your personal income tax return, then you need to wait a couple of months and then the tax office informs you about the amount due or refundable. What is if that amount is not in line with what you expected, then there is an incorrect tax assessment.

There are several situations that can happen. Maybe the tax office send you a letter in which they announce that they will not impose the assessment as you filed the return. In that letter the reason for this change is explained.

We experience that persons often forget an employment they have had for a short period of time, or an after payment of a previous employment. In both cases the past employer provided you with an income statement. Maybe that has not reached you, because you moved or changed email address. This employer also communicates these overviews with the Dutch tax office, hence the tax office knows what income you should be reporting. If you do not, the tax office will make the change for you.

Appeal

You have the right to appeal against an assessment you disagree with in 6 weeks from the date the assessment carries. However, if you appeal against the afore mentioned income that was announced to you, you should have replied to that announcement already to proof there was made a mistake somewhere. If no mistake was made, the appeal will have no effect.

The period to appeal is 6 weeks from the date of the assessment, please note, that is under the condition the assessment was correctly provided to the tax payer. If you no longer live at that address, because you moved abroad, and you never received any assessment, then  the 6 week period starts to count from the first day you were able to take notice of the assessment.

Too late appeal

If you did receive the assessment at your address but for any given reason you did not reply to this incorrect tax assessment, can you then still appeal? No you cannot.

The rule is max six weeks to make the system more consistent. Consistent in the sense that the tax office cannot receive a surprise appeal 3 months after the date of the assessment. That would make the tax system inconsistent, as all assessments basically are temporary. That is not good for the communication flow between tax office and tax payer.

What if you do have an incorrect tax assessment and the period to appeal has been exceeded? In that case you write a kind request to the tax office to ask them to have a look at what you think is incorrect. Then the tax office can reply by manner of courtesy to your request. If a genuine mistake or miscalculation was made, the tax office is kind enough to update the assessment. However, if the tax office has a different opinion, then you are informed about this opinion, but you have no more rights to go to court for this matter, as you were too late.

Incorrect tax assessment
Incorrect tax assessment

Your responsibility

You can hire a tax advisor to file your income tax return and to assist you with your tax matters, but magic is not one of the services a tax advisor provides. Even though sometimes we feel tax is so exciting, it is magic.

With this I refer to messages the tax office sends to you, are not necessarily send to your tax advisor. There is no crystal bowl that informs the tax advisor about your mail you receive at home.

This sounds a bit childish, but exactly this is the complaint we sometimes receive. That we are the all seeing tax eye that should have known an incorrect tax assessment was received by the tax office to which now no appeal can be made, as it is too late.

A tax payer has obligations and responsibilities. The obligation to comply with the rules and regulations and the responsibility to look after himself all is processed correctly. For that you can hire a tax advisor, but then you also need to fully disclose the tax advisor on messages received by you. Then the necessary action can be taken to prevent an incorrect tax assessment.

Orange Tax Services

We can check for you if the assessment you question is indeed incorrect. Or we can assist you to appeal an incorrect ex officio tax assessment. That is what we do on a daily basis. We think tax is exciting, almost magic.