Dutch tax resident implies Dutch tax rules apply. This principle is not accepted by everybody. Some prefer to pay tax in Luxemburg, some in Dubai. Some apply other country rules in the Netherlands.
Dutch tax resident implies Dutch tax rules apply
The Dutch rules we see being challenged on a daily basis. It is the wish of the thought more than common sense. At least, we hope for that person this is the case.
We experience on a daily basis that people prefer to be taxed in another country. Upon our question why, the answer is that the tax rate is lower in that other country. We counter that if this was possible, would anybody still pay Dutch tax? This is often answered with silence.
Dutch tax rules versus Spanish – court case
A Dutch tax resident filed his 2015-2019 income tax return with no Box 3 assets. Box 3 are for instance you bank accounts, shares, stock. The assets subject to Box 3 tax.
The tax office inquired as a result of the Dutch tax return about Spanish bank accounts. The reply was there were none. Upon an official information request this Dutch tax resident replied that he did have a Spanish bank account, but the money was given to him by his grandmother.
In the meanwhile the Spanish tax office shared with the Dutch tax office the Spanish bank account containing EUR 700.000. The Dutch tax resident did not report this amount, as the tax free amount in Spain was EUR 700.000.
For the period 2015-2019 the Dutch tax office imposed Box 3 tax plus 75% penalty.
The Dutch tax resident went to court. The court was quick to reply that being a Dutch tax resident, the tax payer is subject to Dutch tax rules. Worldwide assets are reported in the Netherlands and for cash in the bank there is no exception.
The Dutch tax resident experienced to be harassed by the Dutch tax office, even after he already moved back to Spain. The court ruled that the Dutch tax office were doing their job. One he lacked in his tax return, hence the activity of the Dutch tax office was brought on him, himself.
Tax is exciting
We think tax is exciting. We also think that if you have EUR 700.000 being gifted by your grandmother, you should be responsible. Inquire if that gift is subject to gift tax in the Netherlands. Probably not. Inquire if that EUR 700.000 is part of the Dutch income tax return, despite the tax free amount in Spain.
Not acting on this rather large amount now results in Dutch tax over the years plus 75% penalty. Now 175% is paid instead of 100% regular tax.
