C form – non-resident income tax return – ready to file 2021 now!

The C form stands for the non-resident income tax return. This tax return is to be filed by a non-resident tax payer who own property in the Netherlands. We are ready to file this tax return now!

C form

In the Netherlands you become a non-resident tax payer when you are not residing in the Netherlands. You do own property in the Netherlands and for that you need to pay tax.

Tax treaties

Tax treaties determine which country can tax what. In every tax treaty the Netherlands has signed with other countries article 7 determines which coutnry can tax the property. That is the country where the property is situated. For us that is a logical statement. The place the property is located, has the property as a burden on their soil, hence it is taxed.

What is taxed?

Taxed are the properties owned by you on January 1 of the tax year. That implies if you purchased the holiday home during the year 2021, you did not own the property on January 1, 2021. This makes you file for the first time in for the year 2022.

The tax free amount per private individual is EUR 50.000. The value of the property is determined by the city, that is the so called WOZ value. From this value you can deduct a possible debt you took out to purchase the property, or spend on refurbishments of the property.

The tax percentage is roughly 1.4% taken over the WOZ value minus a possible debt. Only the amount exceeding the EUR 50.000 will be taxed. C form ready to file now.

I have no Dutch tax number also referred to as BSN number

In order to be able to file the non-resident tax return you need to have a Dutch BSN number. There are two types of BSN numbers, a domestic one and a non-resident one. You need the latter of the two. Mind you that you do express yourself correctly when you apply for the number, otherwise your worldwide income is taxed in the Netherlands instead of only the Dutch property.

If you have no BSN number or you cannot travel to the Netherlands to obtain one, we will be happy to solve this for you. Can be done remotely.

I have never filed the non resident tax return

In the event you do own the property for a number of years, but you have never filed a Dutch tax return, we can solve that for you. That is for the past 5 tax years. Beyond that contact needs to be made with the Dutch tax office.

Tax is exciting

We think tax is exciting. As always we are excited to file your 2021 non-resident income tax return. We can start instantly. C form ready to file now. Our fee is EUR 390 till July 1, from then onwards our fee is EUR 410 instead. Please reach out to us to get the tax return done.

A non-resident BSN number request, how is that done?

non resident

You live abroad, you would like to purchase a Dutch property. Or you already own a Dutch property for which you need to file a Dutch tax return. How to get the non-resident BSN number in the first place to file this return?

A non-resident BSN number request

You would have to request a Dutch tax number, also known as Burger Service Nummer or BSN. In order to do so, you would have to come to the Netherlands and register in the BRP (Basis Registratie Persoonsgegevens) as non-resident. However, many issues occur, especially now with COVID-19.

Incorrect registration

One thing that can go wrong, is an incorrect registration. The Dutch tax number can be obtained by city hall. City hall issues resident tax payer BSN numbers. If you are not aware and they ask your details and Dutch address, you might assume the city wants to learn the address of your Dutch property. That is not the question, the question is your address. If you give your address, that is abroad, the city hall person will know you need a different procedure.

Should you have misunderstood and you provide your Dutch property address details as your address details, you are at the spot registered as a Dutch resident tax payer. That implies you need to report your world wide income and assets in the Netherlands. But clearly, you are not a resident, you are a non-resident.

Still, you not being a tax accountant might not see the issue on hand yet. You walk out, leave the Netherlands, and while you left, tax messages arrive on your Dutch property address. You might be a nice landlord, or not a nice landlord, regardless, the tenant often does not feel obliged to update you. The moment you are aware you have issues, is the moment the Dutch tax office seizes your Dutch bank account, because you have not paid outstanding ex officio assessments.

Expenses

Besides incorrect registration, it can also be very expensive to come to the Netherlands, only to obtain a BSN. Having to travel to the Netherlands, most likely having to spend the night in a hotel, it all adds up very quickly. Can it be cheaper? Yes it can, if we assist you.

Solution

Correct, many issues, but one solution. Have us request the non-resident BSN number for you!

We require the following details:
– Full name
– Date of birth
– Full address
– Certificate of residency

With these details, we are able to request a non-resident BSN number on your behalf! Our fee to do so is EUR 100, including VAT.

We are excited to assist you already!

My name is Kelly and I think  tax is exciting!

non-resident BSN number

Empty Value Ratio – How does it work and how do I apply for this?

non resident

Do you own a Dutch house that is not your main residence? Are you renting out this property for 2 years or longer under a rental contract? If the answer to these questions is yes, we might have exciting news for you!

Empty Value Ratio – Renting out a Dutch house

A question we often get, is what happens tax wise with a house when the property is rented out. The main difference is that the property will be no longer considered your main residence and will therefore be taxed in box 3 instead of box 1.

As the property is no longer your main residence, you can no longer deduct the mortgage interest. Instead you report the so called WOZ value, the value set by the city, in Box 3. This value is reduced with the debt you have on January 1 of the concerning year. The difference, minus the EUR 50.000 (2021) threshold amount is taxed at about 1.4% income tax.

The rental income is not taxed in the Netherlands.

Empty Value Ratio
Empty Value Ratio

When does the empty value ratio apply?

You do have to meet specific requirements in order for you to be entitled to the empty value ratio. If one of the below is not applicable, then you cannot apply the empty value ratio.

The requirements are as following:
– You rent out a Dutch property
– You rent out the property on 01-01 of the relating year
– There is a rental contract
– The rental contract is 2 years or longer
– You receive the rent on your bank account

What is the empty value ratio?

The empty value ratio is a way to reduce your WOZ-value. The WOZ-value is the value of the property that is used for tax purposes. How much you can lower your WOZ-value depends on how much rent you receive in comparison to the WOZ-value of the property. Only the amount received for the actual rent are taken into account. If the rent includes for instance electricity and water, this part cannot be included in the annual rent received. The calculation is done via the following brackets:

Percentage of rent in comparison to WOZ more than:But no more than:Empty value ratio is:
0%1%45%
1%2%51%
2%3%56%
3%4%62%
4%5%67%
5%6%73%
6%7%78%
7%85%

Example

If the annual rent received is between 2 and 3% of the WOZ-value, the WOZ-value for tax purposes has to be 56% of the actual WOZ-value.
For instance, your WOZ-value is EUR 400.000. The annual rent received is EUR 18.000. In this case, the annual rent received is 4,5% of the WOZ-value, the WOZ-value has to be taken into account for 67%, so EUR 268.000.

The fun part is the mortgage debt reducing the EUR 268.000 of this example at the full value. If your mortgage debt is EUR 238.000, then the balance in this example is EUR 30.000. Each person has a EUR 50.000 (2021) threshold. This implies no Box 3 taxation is to be paid. You did receive EUR 18.000 rental income. If you paid 2% interest over the EUR 238.000 debt, being EUR 4.760, you still have an income of EUR 13.240 tax free.

Box 3 threshold per individual

In the event you and your partner own the house in the Netherlands. You both left the Netherlands and put up the house for rent, the house is in Box 3. Even though legally each of you owns 50% of the house, we often see one of the partners report the house for 100% in their non-resident income tax return.

The moment one partner also reports the ownership of the other partner, it is legally not correct. The tax office does not care less, as long as the tax is being paid. For the partners there is a difference. If one partner report the property, this one partner has only one time the EUR 50.000 threshold amount. When each partner reports 50% in each tax return, two times the EUR 50.000 threshold can be used.

Not only is the tax return then filed correctly from a legal point of view. Each partner uses the full tax percentage range, read twice low range, of Box 3 tax brackets.

You might assume we inform you so we can charge you twice for the income tax return. As much as we like to agree with you, we do not. One family is one family rate of EUR 390 (2021).

Tax is exciting

We think tax is exciting. We are very much excited to help you pay less income tax when that is legally possible. The non-resident income tax return offers you opportunities. We will be glad to assist.

My name is Kelly Postema, feel free to reach out if you would like us to assist you with claiming your lower WOZ-value, due to the empty value ratio.

Dutch property and Dutch tax

living abroad

You own a Dutch property and Dutch tax is what you need to file. How to file a Dutch tax return if you live abroad?

Dutch property and Dutch tax

A Dutch property you own and you wonder if you need to file Dutch tax. The answer is: yes, you need to file a Dutch tax return.

Dutch property main rule

The main rule is that when you own a Dutch property, the Dutch tax treaty with your country states that the Netherlands can tax this property. A property in this matter is a residential home you own. You either have a pied a terre for yourself, which implies the property is empty. Or you rent out the property.

Dutch tax

For Dutch income tax purposes there is no difference in renting out the property or using the property for your own purpose. In either case the taxation is the same.

If you own a property in the Netherlands, but you are not a Dutch tax resident. In such a situation you  are regarded as a non-resident tax payer in the Netherlands. You will be only subject to tax related to the property, nothing else.

What is taxed?

Taxed is the so called WOZ value. The WOZ value is a value set by the city in which you own the property. This value is updated every year. Based on the WOZ value you pay local tax, but you also pay income tax.

The WOZ value is reduced with the debt you took out to purchase the property. This difference is taxed with roughly 1.4% income tax. There is a threshold of EUR 50.000 (2021). This threshold is per person, which implies if Mr and Mrs both own the property, each of them should file individually. Then the EUR 50.000 threshold can be claimed twice.


What is the first year of taxation?

The first year of taxation is the year in which you own the property on January 1.

Example.

You purchased the property on February 12, 2019. That implies you own on January 1 for the first time the house in 2020. This means the first tax return to be filed by you is the 2020 income tax return, to be filed in the year 2021.

How to obtain your non resident tax number?

If you have been a Dutch tax resident, a Dutch tax number or BSN number was issued to you. The moment you moved away from the Netherlands, you deregistered from city hall. If you owned while deregistering a property in the Netherlands, your Dutch tax number has become automatically your non-resident tax number.

If you are in the Netherlands for the business of the property, you can make an appointment with city hall for a non-resident tax number. Be very specific for the non-resident tax number, otherwise you get a resident tax number. That is not desired. For a resident tax number you can walk in with city hall any time. For a non-resident tax number you need to make an appointment.

In the situation you purchased and paid for the property in the Netherlands, but you have not visited the Netherlands. You cannot visit the Netherlands, or you have no desire to visit the Netherlands. In that situation we have a solution how to obtain a Dutch non-resident tax number. Please contact us.

Tax is exciting

We think tax is exciting. We are already very excited to file your non-resident income tax return. Our fee is EUR 390 incl VAT per tax return. Feel free to contact us.

In case you have forgotten to file your Dutch non resident tax return and you do already own the property for a number of years. We can go back easily 5 years. We can also go back longer, but not easily. Still happy to assist you.

Property investment in the Netherlands and tax

Capital gain tax in the Netherlands

Property investment in the Netherlands has a tax consequence. There are multiple situation how you invest, we try to touch most of them in this article.

Property investment in the Netherlands

You live abroad and you wish to invest in the Netherlands. After you made the purchase you have become a non-resident tax payer. That implies you are not living in the Netherlands, but you do have an asset in the Netherlands for which you need to pay tax.

Dutch tax number

In order to be able to actually file the non resident income tax return, you need a Dutch tax number. We refer to that number as the BSN number. The Dutch tax number or BSN number is normally obtained when you register yourself with the city hall. Then automatically the resident tax number is issued.

Please note, you are not a Dutch tax resident. Do not register at city hall as a regular tax resident, emphasis you are not living in the Netherlands, only own property in the Netherlands. To obtain such a non resident tax number a different procedure exists.

Dutch tax resident

If you are living in the Netherlands you obviously can invest in Dutch property as well. This article is about investments not being your own home. An investment that is not in your own home is taxed in Box 3. The Dutch tax system is a boxing system and the taxation of property is taxed in Box 3.

Property investment in the Netherlands and tax
Property investment in the Netherlands and tax

Nonresident tax payer and resident tax payer

A nonresident tax payer and a resident tax payer, pay the same amount of tax, have the same tax credits. Taxed is the so called WOZ value minus a possible debt you took out in order to be able to purchase the Dutch property. The balance of that amount is taxed in Box 3. How much tax you actually pay depends on the amount that is taxed. We have since a couple of years tax brackets in Box 3. As the tax rates will go up, take 1,4% tax as a good indication.

Income taxed

Taxed is the value, not the actual rental income. Nor can you deduct any costs. The value used is the so called WOZ value. A value determined by the city based on similar type houses recently sold. The WOZ value of the house we can manually reduce in the income tax return. That is possible based on the rent actually received and the contract you have with the tenant. If the house is for instance a pied-a-terre, then the value cannot be reduced.

Transfer tax

Transfer tax is 8% for investment properties. We are sometimes asked by persons that would like to purchase a property in the Netherlands for their child. The transfer tax is then 8% and the parents have become Dutch nonresident tax payers for the house. That implies an annual income tax return to be filed and tax to be paid.

If not the parents would purchase the house, but the money is loaned to the child and the child purchases the house, then the transfer tax is 2% and under conditions even 0%. The house is then taxed in Box 1 and could result in a refund, instead of tax to be paid.

If parents are afraid their child will sell the house and run to Vegas to spend the proceeds, the parents can put a mortgage on the house, via a notary. Then the house cannot be sold without their permission.

Tax is exciting

We think tax is exciting and we are already excited about filing your nonresident income tax return for EUR 390 incl VAT.

Start a remote work place

deductible costs

Start a remote work place or start employment with a foreign employer is something  we see happen more and more. How is a remote work place taxed?

A remote work place

Internet makes the world smaller and we see that foreign employer like to keep employed their employee that moved to the Netherlands. The move to the Netherlands is often initiated by the partner. The partner is offered a position in the Netherlands, or wants to return to the Netherlands or has another reason to move.

Can you have a remote work place?

Yes you can.

The rule is that you pay tax in the country where the work is actually being done. That implies you need to pay Dutch wage tax over your salary from the foreign employer. The foreign employer therefore needs to set up a Dutch payroll. In order to be able to set up a Dutch payroll a Dutch registration needs to be made.

The moment the Dutch registration is made, the foreign employer has become a Dutch employer for the remote work place. That implies the employee in the Netherlands is subject to Dutch social premiums. In case the employee prefers to remain socially insured under the foreign employer country system, this needs to be applied for via the proper institutes.

a remote work place

Will the foreign employer become exposed to taxation in the Netherlands?

It depends on how the employer will be registered, but if exposure is not desired, then the employer can be registered at a very low exposed manner. Low implies only exposed for the tax to pay over the salary of the remote employee.

Is a remote work place different from a regular Dutch employment?

Not at all.

  • Dutch labour law applies, even if the employment contract is based on foreign rules and regulations.
  • Dutch tax is to be paid.
  • Dutch incentives such as the so called 30% ruling can be applied for.
    If the employee purchases a house in the Netherlands, the mortgage inters can be deducted. The remote worker is like a domestic Dutch employee.

Tax-is-exciting – set up

We are very much excited to assist you to persuade, if necessary, to have your foreign employer comply with the Dutch rules and regulations. At the same time we understand the foreign employer being hesitant to enter a country, especially the Netherlands, with its own rules of taxation.

Hence we offer a low exposed tax registration for the foreign employer, where the foreign employer does not need to be afraid to become exposed to any other tax than the tax related to the employment of the remote worker. This is possible when certain conditions are being met, and we will be glad to share these with you the moment you inquire about a set up.

At the same time we need to inform the foreign employer that Dutch rules and regulations with respect to labour law apply, hence we suggest to set up a Dutch contract for the remote worker. Or at least have contact with a Dutch labour lawyer.

Are you as employee interested, contact us and we provide you with information you can show your foreign employer. This will help making the decision.

Are you the foreign employer, contact us and we can set up quickly the nonresident employer payroll for you.

Tax on Dutch property while living abroad

Tax on Dutch property while living abroad is a topic that often runs by our office. Sometimes pleasant, the owner is on time. Sometimes less pleasant, the owner is basically very much too late and the tax office is already keen to sell. Indeed sell.

Tax on Dutch property while living abroad

The rule with property is, that property is taxed in the country where the property is actually situated. The logic behind this, is that the soil of the nation on which the property is a burden, should be able to tax the house.

That implies that if you are a Dutch tax resident, you need to report your worldwide assets including property abroad. For the property abroad you receive a double taxation relief.

The other way around is also applicable, if you live abroad and you own a Dutch property, then you need to file a Dutch nonresident income tax return in which you show the value of the house minus possible debt taken out to purchase the house and over that balance you pay the Box 3 tax rate. That is how you pay tax on Dutch property while living abroad.

Tax on Dutch property while living abroad

You live abroad – living life and not thinking  about Dutch tax

We have seen it happen many times. You owned the house you purchased. Chance to work abroad arose, you left, rented out the place and have an agency in charge over this. You see the money coming in and think all is well.

Sequence of events:

You are invited to file by the Dutch tax office – you completely miss this invitation

The Dutch tax office reminds you to file – you completely miss this reminder

You are again reminded by the Dutch tax office to prevent a penalty – you completely miss this penalty saver

An ex officio assessment is issued by the Dutch tax office based on WOZ value only – you miss this one also

The tax office starts to put collecting fees on this assessment and starts the same procedure with the next year.

Letters become uglier by the day and for some reason the collector does know how to reach you at your present address abroad with the total sum of let us say EUR 85.000 in tax due over 5 years time.

You are far away, so you feel like you are not in harm’s way yet, until the moment the tax office informs you that they have the power to sell your house. Maybe your initial though is “the market is good, have them sell my house”.  That is not how it works. The tax office needs EUR 85.000. Your house can have a EUR 850.000 WOZ value, but if someone offers on the auction EUR 85.000 for the house, the tax office will accept, as that is the debt that needs to be settled. You end up with no house, no more tax debt, but you do have issues with your mortgage provider. You do have a mortgage on your house, but tax debts overrule the mortgage debt.

Of course the tax office will do thorough investigation about your whereabouts to get you to respond to the outstanding debts, as this auction sale is a paper trail they like to avoid as well.

To be honest, the tax office dislikes this case as much as you do. Both you and the tax office like to solve this, but all depends and what you communicate and how you do that.

What do you need to do?

Doing nothing is not an option, so you need to contact us. The sooner the better, as we can only go back 5 years with the tax return. If we need to go back 6 years, we fully depend on the period exceeding the 5 years on the mercy of the civil servant.

What will we do for you?

We first disclose that we charge EUR 390 per tax year which is a calendar year for the income tax return. Then we collect information with you. Information about the housing being rented or not. If yes, what is the collected amount of rent. Possible mortgage debt on the house.

With that information we file a tax return and it can happen that you have tenants and a mortgage on the house, resulting in no income tax due at all. Only hour fee.

Of course that is not the end of the story, we file after we processed the tax returns a complaint with the tax office against the ex officio assessments. How that process goes depends on the information at hand and the experience of the civil servant working with the Dutch office.  This time spend is outside the EUR 390 per tax return.

In the end we can solve a lot.

What is not possible to solve?

The EUR 369 penalty for being too late. Too late is too late, we cannot change that.

The collecting fees of the debt that you are not due in the end.

Tax is exciting

The exciting part is that should you have us file your tax returns for those years, no income tax might have been due. The sooner you ask us, the less trouble you have. Then you might start thinking with more excitement about the Dutch tax system as well.

That said, if you come to us knowing you have been behaving badly and you need it solved urgently. Getting you in (tax) line is something we are always excited about.

Home address in car navigation system determines tax residence?

Where you have your tax residence is determined by facts and circumstance, not by official registrations. Often we are asked about the facts and circumstances, here an article dedicated to facts and circumstance.

Tax residence travelling trader – court case

A Dutch national was registered with a city hall in the Netherlands. March 2, 2015 he deregistered and stated to have left to Poland. So he stopped being a Dutch tax resident officially.

December 3, 2015 he purchased a company car in Belgium with Belgium license plates. The same day the Dutch tax office issued a BPM assessment with 50% penalty. What is BPM? We, the Dutch, believe car use should be reduced and use a tax tool that purpose. Any vehicle that comes to the Netherlands had to pay in 2015 45% tax on top of the costs of the car manufacturer.

Example, you purchase a BMW new for EUR 50.000, then you need to realize that in that amount is EUR 15.517 BPM tax, so the car actually costs EUR 34.483 and that is including 21% VAT.  This cheap a BMW actually is, but most Dutch cannot afford this cheap BMW due to the tax.

In my example the BPM was EUR 15.517 and the tax office put on top of that amount a 50% fine in the court case. To put the severe measure in perspective.

Facts and circumstance tax residence

The Dutch tax office imposed the BPM assessment in the above mentioned court case based on their opinion that the Dutch national never left the Netherlands as a tax resident. So he officially deregistered, for tax purposes the deregistration is not so much relevant, is more an indication. As he drove a Belgium license plated car, he the assumed Dutch tax resident had to pay the BPM on the spot.

The tax office stated that the Dutch national spend most of his time in a caravan on a campsite in the Netherlands, that he travelled often in the Netherlands. That he spend a lot of time with his child who lives with his mother, no longer the wife of the Dutch national, in the Netherlands. That he washed the car often in the neighborhood of the Dutch campsite.

How does the tax office know these facts you might wonder. Well that is what the cameras do you see at the border, and in 2015 also around Ikea, family parks and big cities.

Home address in car navigation system determines tax residence?

The Dutch national agreed he visited his child, agreed he washed the car in the Netherlands, but disagreed he was a tax resident in the Netherlands. He works and lives in Belgium.

The court ruled as follows

The Dutch court did not held against the Dutch national that he stated to have left for Poland when he deregistered for city hall. Not relevant for the court. The court was convinced that he worked and lived in Belgium and for work travelled to the Netherlands. And he travelled to the Netherlands to see his child, but that was not enough to make him a Dutch tax resident.

In an ultimate attempted by the Dutch tax office to proof their point, the showed pictures of the car navigation system used by the Dutch National. The court concluded that the home address, that is the address you can put in a navigation to easily guide you to your home, was not a Dutch address, but a Belgium address.  Hence the court decided the Dutch national was indeed no Dutch tax resident. No BPM and penalty were to be paid for the car.

Tax is exciting

We hoped to have showed you via a court case how detailed the Dutch tax office operates to determine where you are a tax resident. We are often confronted with clients who simply state that they are a tax resident in a cheap taxed country, but we need to inquire where the groceries are normally purchased. Our clients sometimes think that is a silly question, but actually it is not.

The extent to which the Dutch tax office went, to proof their point, car washing, campsite, pictures of navigation. That is scary, some former Easter European dictator’s dream almost. So the lesson learned, ask your tax advisor, before you install your car navigation, what is your home address.

Non resident tax payer

The non resident tax payer is obviously a non resident, but why should the non resident pay tax in the Netherlands?

Non resident tax payer

A non-resident tax payer is a person that is not living in the Netherlands, but who owns property in the Netherlands. The tax treaties the Netherlands has with the numerous countries state on the subject of property, that property is taxed in the country where the property is situated. Actually a logical situation, as the property is basically a burden on the soil of that country, hence it is only fair that this country can tax the property.

How do you become a non resident tax payer?

Often you first come to the Netherlands to work, you like it here, you purchase a house and after a period of time you go back to your home country or to a new challenge in another country. The real estate prices are going up rapidly in the Netherlands, therefore often the house is not sold, but rented.

Due to the fact you were already a tax resident in the Netherlands, you have a Dutch tax number. The moment you leave the Netherlands you deregister from city hall and you have become a non resident tax payer for the property you own in the Netherlands.

If you have never lived in the Netherlands, but you have purchased a property either for your children to live in or an investment, then you need to register yourself as a non resident tax payer. This you do NOT do by simply visiting city hall, as they automatically register you as a resident tax payer and then your world wide income and assets are taxed in the Netherlands. You need to contact the city, explain you are a non resident and you are in need of a Dutch tax number or BSN. Then they make for you an appointment where you have to show up in person, with identification and proof of your foreign address (recent bank statement). There you are registered as non resident tax payer.

Non resident tax payer
Non resident tax payer

What is taxed as non resident?

Taxed is the value of the property, minus a possible loan taken out to purchase the property. That amount is then reduced with the tax free amount for wealth tax and over the outcome you are more or less due about 1.2% income tax.

The value of the property is determined if it is a residential property, by the city via a so called WOZ value. That is the value to be used.

The rental income is not taxed, the costs you have for a loan (interest) or maintenance are not deductible. The rental income, if lower than you would expect for the value of the property, can influence the to be calculated value of the property.

When are you expected to file the non resident income tax return?

In the year that you own the property on January 1, that is the first year you need to file the income tax return. If you are not invited to file, but you are aware you need to pay income tax, as you purchases a house well above the tax free amount without a loan, you ought to know you need to file the tax return.

Orange Tax Services

We can file your non resident income tax return for EUR 390. Feel free to contact our office.