Deductions when living in the Netherlands with income from abroad

Do you live in the Netherlands and you have income from another country? If so, you must state this income in the Netherlands. But you do not always have to pay income tax in the Netherlands on this income.

On this page:

• In which country do I pay taxes?

  If you live in the Netherlands, you must state your worldwide income in a Dutch tax return. Your worldwide income is your Dutch and non-Dutch income combined. You declare both incomes in the Netherlands, but this does not mean that you always have to pay income tax on both in the Netherlands.

  Read more under Will I be taxed twice if I have income from multiple countries?

• Agreements with other countries

  The Netherlands has tax treaties and arrangements with many countries. These treaties state which country may levy tax on certain income. However, if you have income from a country without a treaty with the Netherlands, you do not automatically have to pay income tax on this in the Netherlands. You will then be entitled to taxation relief.

  Read more under Treaties

• Deduction to avoid double taxation

  In order to prevent you from paying income tax on the same income in several countries, you can obtain tax relief in the Netherlands in order to avoid double taxation. You will see the amount of your deduction when you file your tax return.

  Read more under Will I be taxed twice if I have income from multiple countries?

• You are a resident taxpayer: deduction is possible

  You are a resident tax payer if you live in the Netherlands. If you have non-Dutch income, you may be eligible for tax relief in order to avoid double taxation.

• You are a non-resident taxpayer: no deduction

  Are you a non resident taxpayer, or a qualifying non-resident taxpayer? In that case, you cannot receive a double tax relief. In your tax return, only enter your income that is taxed in the Netherlands. For Dutch income on which you do not have to pay tax in the Netherlands, you can request exemption in your tax return.

  Example

  You live in Belgium and work for the same employer partly in the Netherlands and partly in Belgium. You will receive a total of €50,000 in salary on which your employer has paid payroll tax in the Netherlands. You have earned an amount of €20,000 with your work in Belgium. You then state your full wages of €50,000 in your income tax return. And you indicate in the appropriate section that the Netherlands may not levy €20,000 on an income.
  
  Do you earn €5,000 in Belgium? And do you receive €45,000 for your work in the Netherlands? Then you are a qualifying non-resident taxpayer, because at least 90% of your worldwide income is taxed in the Netherlands (€45,000 / €50,000 x 100 = 90%). In that case, too, you state your full wages of €50,000 and subsequently request an exemption for €5,000.

• Transfer arrangement (carry over rule)

  If the tax relief in order to avoid double taxation is higher than the actual tax, then the transfer arrangement or carry over rule applies.

  How does the transfer arrangement (carry over rule) work?

  The double tax relief may not exceed the income tax in a box. If you state a deduction item in your tax return, but this deduction item does not give you a tax advantage, you can make use of the transfer arrangement.

  You will receive a decision from us stating the amount of your foreign income that will be included in the calculation of the deduction in a subsequent year. You can have more than one decision: for example a decision for box 1, and a decision for box 3.

  We automatically apply the transfer arrangement. You not need to apply for this scheme yourself. You can request the amount available for the transfer scheme in writing, in a letter to:

  Belastingdienst/kantoor Eindhoven
  Postbus 90056
  5600 PJ Eindhoven

  Example of how the transfer arrangement works in box 1

  Calculation of the double tax relief in box 1: Your income consists of €27,226 income from earnings in Germany €4,536 in negative income from being a homeowner. Your taxable income from work and home (box 1) then amounts to €27,226 - €4,536 = €22,690. You then have to pay €944 in income tax.
  
  For your income from earnings in Germany you owe tax in Germany and in the Netherlands to avoid double taxation you are entitled to a rebate. In this case the rebate to avoid double taxation would amount to €27,226/€22,690 x €944 = €1,133. But since you only have to pay €944 on your taxable income, the amount of the rebate will only be €944, as this is the maximum amount of the rebate.
  
  In this example, the negative income from your owner-occupied home does not lead to a tax advantage. That is why this amount (€4,536) is reserved. Should you have income in box 1 in the future on which you have to pay income tax in the Netherlands, a double tax relief will still be given on the reserved amount and you will receive a tax refund. This is called the transfer arrangement or carry over rule.