Working abroad for a short period, where is your tax residence? A question often asked by people going to work in Dubai. But this court case is about Austria, also nice, bit cooler.
Working abroad for a short period
The opportunity could come across that you are offered a job abroad. A short term appointment, but well paid. The question is then: where will this income be taxed? That depends.
House in the Netherlands
In the situation that you are going to work abroad but you own a property in the Netherlands that is regarded your main residence, that is a challenge. Our experience learned us that the Dutch tax office considers you a Dutch tax resident, even if you work for a longer period abroad. The aforementioned is made stronger if your partner stays in the house.
The solution could be to rent out the house. If you rent out the house, then it is no longer your main residence. Then it is possible the Dutch tax office assumes you are no Dutch tax resident, especially when you deregistered from city hall as well.
Possible risks – not tax related
We assume you purchased the house with a mortgage. The mortgage contract probably clearly states that you cannot rent out the house. If you do rent out the house, the mortgage bank is likely to demand repayment of the mortgage in fourteen days time. And during the rent period, no mortgage deduction.
Your Dutch health care insurance is automatically cancelled almost instantly when you deregister from city hall, we have been told. Make sure you are covered for health care insurance during you stay abroad. The travel insurance coverage is not the same as health care.
Tax residence issue – court case
A lady was offered to play in an musical theatre in Austria for the period August 2017 to June 2018. The Austrian income was taxed in Austria. To avoid this income to be taxed in the Netherlands as well, she claimed to have left the Netherlands tax wise.
The tax office denied her having left the Netherlands as a tax resident. She went to court and the court agreed with the Dutch tax office. The court ruled that she did leave the Netherlands, but did not deregister with city hall. On request, she could not provide her Austrian residence certificate, tax forms and other normal paper work for an Austrian tax residence. No Austrian bank account could be shared by the lady, which would be a normal aspect of life as an Austrian tax resident.
On top of that the apartment rented in Austria was made available by her Austrian employer. This rental agreement stopped when her employment stopped in June 2018.
All facts and circumstances point at the stay in Austria as a temporary stay, hence the main residence had remained the Netherlands. The Austrian income was part of the Dutch tax return.
Tax is exciting
We think tax is exciting. Understandably people that work abroad for a short time in a country with maybe a better tax climate as the Netherlands, try to prevent this income to be part of the Dutch tax return. But if you claim no longer to be a resident of the Netherlands, act as one.