International Tax in the Netherlands: Avoiding Double Taxation
If you live or run a business in the Netherlands but also earn income from abroad, it’s essential to understand how international tax rules work. These rules determine how you are taxed on your worldwide income. It may seem complex, but step by step it can be made clear. With the right guidance, you’ll avoid surprises and ensure you don’t pay more tax than necessary.
Why do international tax rules matter?
The main purpose of international tax rules is to prevent double taxation. In other words, you shouldn’t have to pay tax twice on the same income in two different countries. This is especially important for expats and self-employed entrepreneurs who work across borders.
International tax rules are based on agreements between countries, most often tax treaties. These treaties decide which country has the right to tax certain types of income.
For example: if you live in the Netherlands but earn income in Germany, the tax treaty between the Netherlands and Germany determines where you pay tax and whether you get an exemption or credit to avoid double taxation.
A practical example
Imagine you’re a freelancer in the Netherlands providing services to clients in the UK. Without international tax rules, you might owe tax in both the Netherlands and the UK on the same income. Thanks to tax treaties, you typically only pay in one country, or you get a credit to offset foreign tax.
How it works in the Netherlands
The Netherlands has tax treaties with many countries. These treaties decide where you pay tax and make sure you don’t get taxed twice on the same income.
The basics
Worldwide income: If you live in the Netherlands, you must declare your worldwide income.
Source country tax: The country where the income is earned may also tax it.
Avoiding double tax: The Netherlands either exempts this income or gives you a credit for tax already paid abroad.
Working days matter: For employees and freelancers, the number of days physically worked in each country often decides where tax is due. Tracking this correctly is crucial.
Why this matters
Used correctly, tax treaties can save you money and prevent expensive mistakes.
Example: A Dutch resident working part-time in the UK avoids double taxation. UK tax is credited against Dutch tax, leaving one fair bill instead of two.
Not reporting all foreign income → risk of fines.
Applying the wrong treaty rule → missed opportunities.
Forgetting documents → no proof of foreign tax paid.
Not tracking working days → wrong allocation of income between countries.
Common pitfalls
There are a few common mistakes I often see with international tax. Some people forget to report all of their foreign income, which can lead to penalties and extra assessments from the tax office. Others apply the wrong treaty rules, which means they miss out on potential tax relief or end up paying too much. A frequent issue is not keeping the right documents, leaving them without proof of foreign tax paid when it’s needed. Finally, many expats and entrepreneurs fail to track their physical working days, which are often decisive for where income should be taxed.
Need a Good Tax Advisor in the Netherlands?
Navigating Dutch and international tax law is what I do every day. Whether you're in Amsterdam, The Hague, Leiden, Haarlem or Eindhoven, the challenges of cross-border work are the same. Instead of getting lost in the rules, let an expert handle it.
If you’re dealing with an international work situation, I’m here to help. Contact me here, and let’s make sure your tax return is handled correctly and efficiently.
