Individuals resident in The Netherlands are subject to income tax on their worldwide income. This is known as resident tax liability. Measures have been taken to avoid double taxation whereby resident taxpayers pay tax twice on all or part of their worldwide income or profits.
In addition, persons who do not live in The Netherlands are subject to income tax on income from a number of sources in the Netherlands. These non-resident income tax payers subject to income tax may still opt to be treated as residence taxpayers. They will also be entitled to the deductions and levy rebates available to resident taxpayers.
Avoiding double taxation for resident taxpayers
Resident taxpayers can avoid being taxed twice on their foreign-source income and foreign-source profits in two ways. In the first place, The Netherlands has concluded bilateral tax treaties with a large number of countries. In the second place, The Netherlands has unilateral provisions that in general apply to situations where no treaty has been concluded with a specific country or where a tax treaty does not include a provision pertaining to a specific case.
Taxation of non-resident taxpayers
Non-resident individuals are subject to income tax in The Netherlands for the following types of income derived in a calendar year:
- Taxable income from work and dwellings in The Netherlands
- Taxable income from a substantial interest in a company established in The Netherlands
- Taxable income from savings and investments in The Netherlands
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