Emigrating is a big step — and alongside all the practical and emotional aspects, there is also an important financial consideration: tax. Many people think that their tax obligations cease as soon as they leave the Netherlands. In practice, however, the situation is often much more complex. In this blog, we explain what changes in terms of tax when you emigrate and what you need to bear in mind.
When are you considered to have officially emigrated for the purposes of the tax authorities?
For the purposes of the Dutch Tax and Customs Administration, you are considered to have emigrated if you live and work abroad on a permanent basis. This means that your personal and economic ties with the Netherlands have largely been severed.
In this regard, the Tax and Customs Administration takes into account, amongst other things:
- Where you live
- Where you work
- Where your social life takes place
- Whether you still own a property in the Netherlands
This is also known as your tax residence.
What happens to your tax liability?
After emigrating, you will usually no longer be a resident taxpayer, but will be classified as a non-resident taxpayer. This means that you will pay tax in your new country of residence on your worldwide income and that, in the Netherlands, you will only pay tax on Dutch income. This includes income from employment in the Netherlands, rental income from Dutch property or profits from a business in the Netherlands.
Tax return in the year of emigration
In the year you emigrate, you must complete what is known as a form M tax return. This is a special tax return in which you:
- Being regarded as a domestic taxpayer for part of the year
- And a portion as a non-resident taxpayer
This tax return is often more complex than a standard one and may have financial implications, for example in relation to tax credits and tax deductions (such as mortgage interest).
What will happen to your property in the Netherlands?
If you own a property in the Netherlands, there are various scenarios:
- You are selling the property → possible implications for the additional loan scheme
- If you retain ownership of the property → the property may fall under Box 3 (capital assets)
- You are letting out the property → tax on returns or rental income
Entrepreneurs and emigration
For business owners, emigration can have additional implications. For example, you may be subject to a final tax assessment (capital gains on the cessation of business). Alternatively, you may be subject to a provisional tax assessment. You will also need to decide where to establish your business for tax purposes. It is important to carefully assess the various options and consequences before emigrating, so that you do not face any unpleasant surprises.
Avoiding double taxation
The Netherlands has concluded tax treaties with many countries. These treaties prevent you from paying tax twice on the same income or from any uncertainty arising as to which country is entitled to levy tax. It is important to understand how this works in your specific situation and in relation to the country of destination.
Why good preparation is important
Emigration often has greater tax implications than one might initially expect. By preparing thoroughly, you can:
- Avoiding unexpected tax consequences
- Taking advantage of tax benefits
- Optimising your financial situation
How Move with IRIS can help you
At Move with IRIS, we not only guide you through the practical aspects of emigrating, but we also help you understand the financial and tax implications. We work with specialists to ensure that you’re well prepared before you set off — with no surprises afterwards.
"Move with confidence, Move with IRIS"
International Relocation & Immigration Services
