This summer has shown once again that we like to go abroad on holidays. Compared to last year, the holiday bookings have increased and so did the number of flights. *)
I also like to travel. Discovering other countries and cultures, meeting other people, enjoying beautiful landscapes and good food. Sometimes I dream and wonder what it would be like to live and work in another country.
The Dutch TV program “Ik vertrek” (I’m leaving) follows people who are chasing their dreams and embarking on a new adventure in another country. It is remarkable (and sometimes hilarious but also embarrassing) to see how people prepare for this. Language problems, no permit, the amount of work, a limited budget or little experience to renovate a house. Sometimes things don’t turn out the way they were planned. The question is whether people also study the consequences for their taxes beforehand.
When you emigrate, it is good to prepare well and think about what needs to be arranged. Not only practical matters, but also financial and tax matters.
Emigration and Dutch income tax
When you intend to live abroad for a longer period of time, at least for a period that is longer than one year, this is considered emigration for Dutch income tax. If you return within one year, you will (in general) still be considered a resident of the Netherlands for Dutch tax purposes.
The so-called tax residence plays a role in this. The tax residence determines in which country someone pays tax and is socially insured. Determining tax residence is a very factual matter and each country has its own (tax) rules regarding residence. Facts and circumstances that may play a role in this are, among others: Do you have a partner and does he or she come with you? Do you own a home? Where do you spend most of your time? Where do you work? Where do you have (telephone) subscriptions, cars, doctors, sports?
Make sure you are well prepared before you emigrate. The following tips may help:
- Be well informed about your taxes. Where will you have to pay taxes? And will you continue to pay tax in the Netherlands after you emigrate?
- Is it advisable to incur certain expenses or to receive income after emigration?
- Where will you be covered under social insurance?
- De-register with your Dutch municipality before you leave;
- Inform the tax authorities of your new address. Note: also inform the Dutch tax authorities of changes of address abroad so that you will always be able to receive mail;
- Do you still have a home in the Netherlands? Then think carefully about what you are going to do with it. If the house is empty in view of sale, it can, under certain conditions, still be regarded as an owner-occupied home (box 1). If you are going to let the property, there are other consequences. Make sure you are well informed.
- Check the allowances and avoid having to pay them back afterwards.
- Stop any provisional income tax refunds.
- Filing your income tax return (M-biljet). At the end of the year, you will submit a different income tax return, the so-called M-biljet (migration).
You may still be entitled to a refund because your employer levies tax as if you had lived in the Netherlands all year. In addition, you will probably not pay national insurance contributions for the whole year.
After a holiday, I always like to come back to the Netherlands. I keep dreaming, but I like living and working in the Netherlands.
Do you have plans to emigrate and have you thought of everything? Then the great adventure can begin! We wish you lots of fun and success with your preparations.
Haven’t thought of everything yet? Gathering information in advance will reduce stress.
We will be happy to discuss the consequences for your taxes.
Please feel free to contact one of our advisers via email@example.com or +31 (0)15 2158815. Want to know more about tax residency? Then download our white paper Tax residence.
*) Source: International Holiday Monitor of the NBTC (Netherlands Board of Tourism & Conventions)
C.J. (Cora) van Geest-Reedijk
Fiscal Employee (present: mo.-tu.-th.)
+31 (0)15 820 00 36