Filing US Expat Taxes for Americans in the Netherlands

Complying with U.S. expat tax requirements from the Netherlands necessitates a clear grasp of the filing threshold and the intricacies of the U.S.-Netherlands tax treaty. Contrary to common belief, residing abroad doesn’t automatically exempt individuals from IRS obligations. Understanding the specific filing threshold, which factors in income and filing status, is crucial for compliance. Proactively navigating these complexities, including seeking professional guidance, ensures a smooth expatriate tax experience and helps individuals optimize their tax position while living overseas.

This post has broken down the essential expat tax info you need to know about living in the Netherlands.

Expat Taxes for Americans in the Netherlands

As a US citizen or permanent resident of the United States, you’ll need to comply with your tax duty. This is done by filing US taxes to the IRS every year, no matter where you live.

In addition to regularly filing a tax return, you may need to report your foreign financial assets to FinCEN (part of the US Treasury) through the FBAR under the FATCA law.

Factually speaking, the US government taxes its citizens worldwide. However, they offer unique tax benefits and provisions to help individuals avoid double taxation. These benefits include:

• Foreign Tax Credit: A dollar-for-dollar tax reduction that goes towards foreign-sourced income
• Foreign Earned Income Exclusion (FEIE): In which expats can exclude up to $120,000 of foreign-sourced income from US expat taxes. 
• Foreign Housing Exclusion: This exclusion allows expats to exclude certain household expenses that come from living abroad.
• Child Tax Credit: American families can receive $1,600 for each child under the age of 17

As an American expat, you’ll be able to grab these benefits with proper planning and use our best-selling expat tax software.

Who Qualifies as a Resident of the Netherlands?

As an expat, your residency status is dependent on the following conditions:

• where your family home is
• you intend to stay long-term 
• you work in the country
• where your permanent home is located
• if you are registered with a Netherlands local authorities
• economic or social ties to the country
• where bank accounts and assets are held 

Most importantly, you are considered a resident if you are:

• married, and your family accompanies you to the country or
• single, you stay in the Netherlands for a year or longer

If you have residency in the Netherlands, you are a tax resident. That means you will need to file and pay Dutch taxes yearly, just as you must for the US.

Netherlands Taxes 101

As a US citizen abroad living in the Netherlands, you must pay taxes if you earn money living in the country. The Dutch tax office – called the Belastingdienst – is to whom you owe taxes.

You can declare your Dutch taxes on an annual return online or with a tax professional as an expat.

Additionally, if you work in a company, your employer will withhold income tax from your salary (a.k.a. “wage tax”).

If you are a self-employed American living in the Netherlands, you will need to calculate and owe any due income tax through your annual return.

Netherlands Tax Deadline

January 1 to December 31 is the tax year for the Netherlands. Then, if you, as an expat, are liable for Dutch income taxes, you’ll need to file a tax return for the Dutch Finance Ministry by April 1. Any taxes owed will be due after the date of your final tax return assessment, which is two months later.

If you decide to register with a Dutch tax professional to do your Netherland taxes, the Ministry will give you an extended deadline – up to one year after the deadline – for your Dutch return to be filed.

30% For Foreign Workers

With a 30% facility, the 30% rule is for highly skilled foreigners moving to the Netherlands for a specific job. When the worker meets the conditions for the employer, the employer can give a tax-free allowance of about 30% off of the foreigner’s gross salary – subject to Dutch taxes.

This rule intends to compensate foreigners for the extra costs they may face when moving to a new country.

Tax Treaty Between the US and Netherlands

The good news is that a tax treaty between the US and the Netherlands helps to avoid double taxation abroad. Double taxation happens when citizens are taxed from their country of origin and the current country they’re living in on their income within the same year.

Tax treaties can allow US citizens abroad to be eligible for:

• Exemption from US income taxes on specific items of income (from US sources)
• Being taxed at a reduced rate from particular items of income (from US sources)

Learn more about tax treaties.

Remember: If you owe US taxes, you’ll need to pay by April 15.

Foreign Income on Dutch Taxes

If you are a Netherlands tax resident, you will be subject to Dutch tax on your worldwide income. However, the US-Netherlands tax treaty does exempt you from specific types of income from Dutch taxation.

Netherlands Social Security for Expats

According to the Dutch government, all residents of the Netherlands must pay into the country’s social security insurance. Due to the US-Netherlands Totalization Agreement, there are critical insights into which country social security would pay into as an expat. 

For example, if you’re to work in the Netherlands through a US company for less than five years, you can pay US Social Security. However, if you are hired by a Dutch employer/company and have worked in the country for more than five years, you will need to pay into Dutch social insurance.

Additional Taxes in the Netherlands

There are a few other taxes an expat will need to pay in the Netherlands in addition to income tax on salaries:

• Non-cash compensation: This includes housing allowances, provided services, and company cars are considered taxable
• Deceased Resident: If a resident of the Netherlands passes away in the country, any assets transferred at death become taxable and taxed at a progressive rate depending on the relationship between the heir and the deceased.
• VAT: The Netherlands has a 21% value-added tax (VAT). Then, there are two additional special rates: 0% (certain goods and services) and 9% (books, groceries, etc.).

US Expat Tax Filing Requirements

As you may know, the US tax year runs from January 1 to December 31. Expats only need to file a tax return if they reach the filing threshold, which we explain in our expat tax guide.

The most important tax deadlines for Americans abroad are the following:

• April 15: Tax payment deadline if you owe taxes
• June 15: Filing deadline an automatic two-month extension for expats
• October 15: If expats requested an extension in July, this is the second extension filing deadline and is also the FBAR deadline
• December 15: Last day of the tax season to submit your tax returns before the new year

If the tax payment or filing deadline falls on a weekend/public holiday, it will transfer to the next business day.

Questions About Expat Taxes in the Netherlands?

Do you have more questions about filing US expat taxes from the Netherlands? Our friendly, expert human tax experts can also help you and assist with your US tax filing within the country.

Be sure to file your US taxes every year with the first and most trusted expat tax software for Americans abroad. Start today by signing up for a free account on MyExpatTaxes!