Understanding Dutch tax residence issues

January 8, 2016

Last year we reported a case involving a Dutch national who claimed an exemption from import duty and tax on his personal property, including his car when he returned to the Netherlands after living outside the EU for a number of years.  

The European Court of Justice was asked to rule on how to determine a person’s ‘normal residence’ and in April 2016 ruled that:

The Dutch Supreme Court will now have to determine where the Dutch national’s country of residence is for import duty and tax purposes. This will allow the Dutch Supreme Court to confirm whether this person could claim an exemption from import duty, VAT and car registration tax for his car and other personal belongings when returning back to the Netherlands.

If it is determined that on balance his country of residence is the Netherlands then it can be concluded that he did not move from a third country and he cannot benefit from the moving exemptions.

How tax residence works from a Dutch point of view for income tax

In the Netherlands in order to establish if someone is a resident for income tax purposes, all facts and circumstances are taken into consideration which may be different from the criteria for ‘normal residence’ for import duty purposes. The existence of a long-term personal connection with the Netherlands is regarded as an important factor.

Dutch case law shows that the following circumstances, amongst others are relevant in this regard:

Any individual from abroad who is working in the Netherlands can have a long-term personal connection with both the Netherlands and another country and thus be considered a resident of more than one country. This can result into double taxation; however most tax treaties agreed by the Netherlands provide some kind relief for this.  

How does this affect my business?

An individual’s residence for tax purposes is always important, as it can have significant financial consequences both for the individual and their employer.  For companies dealing with cross border workers or international assignments, it is prudent to clarify the residence (and tax) position of their assignees in both the home country and the host country as soon as possible to enable proactive tax planning during the assignment.

Further information

For further information please contact Kees Bouwmeester on kees.bouwmeester@loyensloeff.com / +31 20 5785785 or Rina Driece rina.driece@loyensloeff.com on +31 10 224 6 424.

Disclaimer

Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this article. For further legal information click here.

To ensure compliance with requirements imposed by the IRS and other taxing authorities, we inform you that any tax advice contained in this article (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

 

 

Category:

CELIA Alliance
CELIA Alliance members are identified here. Members of the CELIA Alliance are each independent law firms and do not practice law jointly with any other member of the CELIA Alliance. “CELIA Alliance” and “CELIA” are not trading names. For more information about the CELIA Alliance click here.

Disclaimer
Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this newsletter. For further legal information click here.

Copying
If you would like to copy or otherwise reproduce this article then you may do so provided that: (1) any such copy or reproduction is for your own personal use or if it is made available to any third party it is done so on a free of charge basis; and (2) the article is reproduced in full together with the contact details, disclaimer and any logos as they appear on each article.

Leave a Reply

Your email address will not be published. Required fields are marked *