Leaving the Netherlands
Leaving the Netherlands or emigrating from the Netherlands can be from a tax point of view, quite complicated for expatriates / foreigners. Especially, if expats bought their own house and use the Dutch mortgage interest deduction. Moving away from the Netherlands can be permanent or just temporarily (worldtrip, secondment, temporary work abroad, working abroad).
Emigration from the Netherlands – questions moving out
Emigration from the Netherlands will trigger the following questions:
- Can I live in two countries from a tax point of view
- Do I stay a Dutch tax resident or do I become a non-Dutch tax resident?
- What about my tax filing obligations when I leave the Netherlands?
- Leaving the Netherlands and possibilities own house / real estate
- When I am leaving the Netherlands do I have to declare the house in my tax return?
- Is it possible to deduct the mortgage interest deduction if I emigrate from the Netherlands?
- De-register myself at the municipality?
- Which country is allowed to tax me (avoidance of double taxation?)
- Who is taking care of my Dutch tax filing obligations and my correspondence address when I am abroad
Based on figures of the Dutch institution called CBS, every day 300 people are leaving the Netherlands. Main reasons to emigrate from the Netherlands are, unhappiness about the political climate, the economic situation and the fact society is becoming ‘harder’ the paper says.
Do I stay a Dutch tax resident or do I become a non-Dutch tax resident?
The Dutch (personal income) tax law makes a distinction between the following taxpayers:
- Dutch tax resident
- Non-Dutch tax resident.
A Dutch tax resident is in general a person that lives in the Netherlands with his family and also physically works in the Netherlands. This individual will be subject to Dutch taxation on his worldwide income, unless a tax treaty for the avoidance of double taxation leaves a taxation right (for certain items of income) to other countries.
A Non-Dutch tax resident is a person who does not live in the Netherlands, but has specific Dutch sources of income. For instance Dutch real estate and/or an employment physically exercised in the Netherlands. In that case you are still obliged to pay tax in the Netherlands. In order to gain access to the deductions and levy rebates available for resident taxpayers (for example mortgage interest deduction, tax credits), it is possible to apply to be treated as resident for tax purposes.
What about my tax filing obligations when I leave the Netherlands?
In a year when a person emigrate from the Netherlands a special form called M form must be filed at the Dutch tax authorities. The M form shows a foreign period and resident periods. Based on the tax treaty it can be determined if specific foreign income must be reported or not.
The M form is a quite complicated tax form when to file income tax return in the Netherlands and cannot filed electronically but only in hardcopy. Filing this migration form requires a Dutch tax advisor.
Leaving the Netherlands and possibilities for your own house / real estate
If you emigrate abroad it might be that you do not want to sell your house because the value dropped to much. As a result, there are several tax possibilities available for your own house.
1) Temporarily secondment facility
The temporarily secondment is a special tax facility where it is still possible to deduct the interest on your mortgage used to finance your main residence (100%). In order to qualify for this facility you must meet the following requirements:
- Before the secondment, the Dutch house qualified for at least a year as your main residence, and;
- During your secondment no other house qualifies for you as your main residence, and;
- During your secondment no other person is living in your Dutch house (not renting out), and;
- The Dutch tax authorities have confirmed that your Dutch house qualifies as your main residence during your secondment.
2) In case of renting out your own house (main residence)
In case you rent out your own house when you emigrate, the house will be taxed in box 3. In this box 3, the income from savings and investments in the Netherlands is taxed. If you do not live in the Netherlands, only certain assets and liabilities fall under taxable income from savings and investments. Generally, this involves immovable property in the Netherlands such as a holiday home. A Dutch bank account / foreign bank account is not taken into account
If you decide to choose for this option, the mortgage interest is no longer deductible in box 1 and the house will be taxed as box 3 income. The received rent is not taxed.
Advice: Try to cover the paid mortgage interest with the rent you would like to receive from your renters.
Want more information about leaving the Netherlands?
Do you want more info about emigration from the Netherlands or want to know what to do with your main residence? We have developed a calculation tool which calculates what is the most advantage for your own house (rent out or not).
Is your question not stated above, please do not hesitate to contact us. You can contact us through the contact form or call us on +31 (0)85 00 30140.
For more information about a Dutch mortgage for expats click here
For more info you can also check the English website of the Dutch tax authorities.