Summing up Taxation in Holland/EU

[themistry]

Many thanks for this post expat, very helpful!

Note the precise meaning of the 30% rule: it means that the Dutch taxman agrees not to tax you on 30% of your income. He is not in a position to make the same agreement on behalf of the British taxman! .

I'm slightly confused by this. Lets say im earning 100K EUROS pro-rota for a year. 30K is given to me tax free, which im presuming is given as 30% of the monthly salary by the management company.

The remaining 70% is then taxed under Dutch law. [by the way, could anyone provide information on how much this is likely to be? - thanks!]

The combined total take home after tax (lets say 75%) is then sent into my UK bank account. Will the British government then tax me on this as my salary? Or actually what happens here? Am I taxed again or does it count that I have already been taxed in Holland? What happens to my NIC contributions etc?

Note: the 30% rule is an option, you could try expenses instead, but most don't find it worthwhile. Also the 30% status has to be applied for by the employer, before the employment starts. It will take a couple of weeks, or months, for it to be approved, and until then you will not be given the 30% tax break.

Do you know if this tax break can be applied retrospectively?

Many thanks!
TM

[themistry]

Sorry. I wasn't clear. It's days stayed - not days worked. So if you stay 2 weeks, and work 1 day, it's still 13 days.

Thanks NotAllThere, very helpful!

TM

[tim123]

The combined total take home after tax (lets say 75%) is then sent into my UK bank account. Will the British government then tax me on this as my salary? Or actually what happens here? Am I taxed again or does it count that I have already been taxed in Holland?

If you are liable to UK tax as well as Dutch tax, you work out the amount that would be due on the total income in the UK, deduct the tax paid in NL and send the rest to HMG.

Note that you Self Assess this. No-one in the UK "taxes" you on this money, you are supposed to volunteer it.

tim

[Turion]

Netherlands have a diferent rule to the UK and resiency status is not a factor. You will be liable to Dutch tax from day one. Double tax treaty rules should still apply. If going thru a service company they must be registered under Dutch rules.

That's ball. Typical agent speak. If you're not resident you can stay working in NL 183 days with Ltd co. I've done it, many others have and are legitimately doing it. Not resident means you are not permanent located there. For example if you stay Mon-Fri in hotels and return to your family every week, like a true consultant.

[themistry]

a true consultant.

IMO, a true consultant would move to wherever the job was, wherever that may be.

[themistry]

That's ball. Typical agent speak. If you're not resident you can stay working in NL 183 days with Ltd co. I've done it, many others have and are legitimately doing it. Not resident means you are not permanent located there. For example if you stay Mon-Fri in hotels and return to your family every week, like a true consultant.

So!

If I know i'd be looking to rent a flat there for 3-9months (depends on the contract), i might as well go via a services company knowing full well i'll use up my 183days pretty swiftly.

Which brings to question, what happens to my LTD? Does it stay dormant while im away? Should I continue paying a small salary from it (assuming I left money in there from previous contracts)?

You guys have been VERY helpful!

Kind regards
TM

[themistry]

If you are liable to UK tax as well as Dutch tax, you work out the amount that would be due on the total income in the UK, deduct the tax paid in NL and send the rest to HMG.

Note that you Self Assess this. No-one in the UK "taxes" you on this money, you are supposed to volunteer it.

tim

So I am in effect being taxed twice.

And lets say the "leftovers" totalled 75k EURO, I presume i'd be paying 40% on 35k...
Ouch...

TM

[Turion]

So I am in effect being taxed twice.

And lets say the "leftovers" totalled 75k EURO, I presume i'd be paying 40% on 35k...
Ouch...

TM

No, doesn't work like that. The tax in Holland will be taken into consideration -double tax treaty. You don't get taxed twice.

[themistry]

No, doesn't work like that. The tax in Holland will be taken into consideration -double tax treaty. You don't get taxed twice.

OH thank the lord!

And i think the final piece of the puzzle falls into place. Thank you very much!

Well nearly the final one, the final one would be.... could any provide any useful info on double taxation?

http://www.hmrc.gov.uk/manuals/dtmanual/dt14000+.htm looks like torture to me

TM

[expat]

"If you are liable to UK tax as well as Dutch tax, you work out the amount that would be due on the total income in the UK, deduct the tax paid in NL and send the rest to HMG."

So I am in effect being taxed twice.

Not quite as bad as that. You are in effect being taxed at the rate that is the higher of the 2 countries'.

After you have paid Dutch tax, the UK taxman works out what you owe in tax; but he credits you with actual tax payments made to the Dutch. So to put it crudely, if you owe (and pay) 25% to NL, and HMRC work out that you would owe 29% total on their tax system, the UK will take 4% from you (29% total due, minus 25% already paid). If the figures were reversed, the UK would take nothing further from you because you've already covered it.

The annoying feature happens if the 1st taxing country gives you a tax break that the 2nd taxing country doesn't recognise: then the effect is that what the 1st taxman gives you back, the 2nd taxman takes in his turn; so a tax break can be worthless.