Guide to U.S. Expat Taxes in the Netherlands
6 min read
January 18, 2023
January 18, 2023
At a glance
As an American, filing expat taxes from the Netherlands can feel a little overwhelming. You probably have a lot of…
As an American, filing expat taxes from the Netherlands can feel a little overwhelming. You probably have a lot of questions, like, “Do I have additional information to report to the IRS?” How do my Dutch financial accounts affect my filing?” “What if I have a Dutch pension?”
If you’re a U.S. citizen living in the Netherlands and thinking about U.S. taxes makes your head spin, you can rest easy — H&R Block is here to help. Below, we’ll cover those questions and many more, including how to file U.S. taxes online from the Netherlands.
Ready to file? Get started on your U.S./Netherlands taxes now!
What Americans living in the Netherlands should know about U.S. taxes
For starters, Americans and U.S. Green Card holders living in the Netherlands should continue to file a U.S. tax return each year. As a U.S. citizen, you have a tax obligation to the U.S. regardless where you hang your hat — whether that’s Amsterdam or Austin, Texas. This is true even if you’re a dual citizen or haven’t lived in the U.S. in years. That means you’re taxed on all your income, including income from your wages, dividends and interest, and rental properties.
Taxable foreign income for Americans living in the Netherlands includes:
- Rental Income
- Qualified retirement account distributions
Working as a U.S. citizen in The Netherlands can affect your taxes even if you don’t stay long. For example, if you earn income while on a short-term assignment, you’ll need to report that income on your U.S. taxes. As you establish deeper financial roots in the Netherlands, you’ll have more considerations for your American tax filing.
You may need to report your Dutch financial accounts and assets. Generally, U.S. taxpayers with more than $10,000 in foreign bank or financial accounts are subject to FBAR filing and reporting requirements. You may also be subject to FATCA reporting requirements if you have foreign assets valued at $200,000 and higher. If you’re confused on your FBAR and FATCA filing requirements, it’s worth it to speak to a tax advisor.
U.S. tax penalties are steep, and can result in fines, a revoked passport, or even jail time. If you’re tempted to skip filing your U.S. taxes or additional financial reporting, you’ll likely pay the price later. The Netherlands is one country that complies with FATCA reporting — meaning the Dutch and the U.S. can exchange information about an individual’s financial accounts. Considering the hefty fines and penalties that come from not reporting your assets (upwards of $10,000 in fines per year), it’s worth it to have a expat tax expert go through your documents to make sure you’re reporting the correct amount.
You can lower your U.S. tax bill and avoid dual taxation with certain tax strategies. If you were worried about double taxation between the U.S. and the Netherlands, you can relax. U.S. citizens working abroad may take advantage of one of two options, detailed below, to lower their taxes:
- The Foreign Earned Income Exclusion and Housing Exclusion – The FEIE and housing exclusion allow Americans living in Holland to exclude up to a certain amount of foreign earned income if they meet certain requirements.
- Foreign Tax Credit – The Foreign Tax Credit allows U.S. citizens to claim a dollar-for-dollar credit on Dutch taxes paid if they meet certain requirements.
Dutch tax-free investments and pensions may not be tax-free in the United States. If you have ownership in a Dutch tax-free investment account or pension, it may be treated as a PFIC, triggering a whole host of other reporting requirements. Learn more about foreign pension taxation.
U.S./Netherlands Tax Treaty and the Dutch American Friendship Treaty
We mentioned above that the U.S. has tax treaties with certain countries, and the Netherlands is no different. While the U.S./Netherlands tax treaty has dozens of provisions, an important one is the agreement to comply with FATCA reporting — meaning the two countries can exchange information about an individual’s financial accounts. Considering the hefty fines and penalties that come from not reporting your assets (upwards of $10,000 in fines per year), it’s worth it to have an expat tax expert go through your documents to make sure you’re reporting the correct amount.
The Dutch-American Friendship Treaty (also known as the Dutch-American Residency Treaty) is an agreement between the Netherlands and the U.S. to promote entrepreneurship. It allows Americans to receive a temporary two-year work visa and residency for the explicit purpose of starting a business within the Netherlands. Should you acquire Dutch residency under this treaty, you’ll still have a U.S. tax obligation and may have to pay a self-employment tax.
Basics of the Netherlands taxes for U.S. citizens
Do U.S. expats pay taxes in the Netherlands? Yes, if you live and work in the Netherlands you may also have to file Dutch taxes, and the Dutch are serious about their taxes. If you’re considered a Dutch resident and you are a high earner, you can see tax rates as high as 49.5%. Dutch taxes are collected by The Dutch Tax Office (Belastingdienst), arrive in a blue envelope, and are due April 30 of the following year.
Who qualifies as a Dutch resident? We recommend you speak with a residency expert, but generally, you’re considered a Dutch resident once you have demonstrable ties to the Netherlands (for instance, you live or work in the country). As a resident taxpayer, the Dutch tax system taxes your assets worldwide.
The 30% ruling is something you should get to know if you were recruited from the U.S. and now live and work in the Netherlands. It’s a tax incentive for employees with specific skills who are recruited from abroad and allows 30% of their gross annual salary to be income-tax-free. There are volumes of stipulations and requirements to qualify, so be sure you speak with a Dutch tax expert before diving into this tax break.
It’s generally more favorable for Americans living in The Netherlands to use the foreign tax credit vs. the FEIE — but there are exceptions. Your tax advisor can help you make the right decision.
How to file U.S. taxes from the Netherlands
It’s easier than ever to file U.S. taxes from the Netherlands with H&R Block’s Expat Tax Services. With multiple ways to file, H&R Block has simplified the process so all you have to do is upload your documents and your Tax Advisor will do the rest. Here’s how to file expat taxes with H&R Block:
- Register online and complete your tax organizer
- Choose your journey—in the driver’s seat with our DIY service or with one of our advisors taking the wheel
- We prepare your U.S. tax return
- You’ll pay for and review the return
- We file your return with the IRS
How H&R Block can help Americans living in the Netherlands with taxes
Thousands of U.S. expats in the Netherlands and elsewhere around the world have chosen H&R Block to handle their U.S. expat taxes for the peace of mind their taxes are done right. Not only can you trust our expertise and guidance to find your credits and tax-saving opportunities, you can get it all done from the comfort of Amsterdam, Rotterdam, The Hague, or wherever you call home. Get started on your U.S. taxes today!
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