Some clients have the opinion that they do not need to pay tax in the Netherlands, because they have not registered themselves with city hall. Some clients state that they are not required to register with the city hall, as EU citizens can work and travel in the EU without registrations. Does this affect the tax status?
No and yes.
The no is about the city hall registration and not being obliged to pay tax. This is of course not true. The tax legislation is based on facts and circumstances. The city hall registration is a tool used by the Dutch Government to enable them to execute the legislation.
Registration city hall is not an obligation for EU citizens but does make living in the Netherlands easier
The yes is about not being required to register if you work and travel in the European Union. This is a right EU citizens have. But not being registered will affect your tax position. Without registration you cannot have a mortgage deduction, as you can only have a mortgage deduction if the Dutch house is your main residence, and as you are not registered here, it is not your main residence. Child benefits, in case you have children of young age. Rent and healthcare benefits if you have a low income will not be granted to you, as you are not registered.
In other words, the city hall registration is a requirement the Dutch tax office would like you to meet, and it does not bring you any disadvantage tax wise. Moreover, city hall issues the Dutch tax number which you need to be able to start employment with any Dutch employer.
On the other hand, if you leave the Netherlands to emigrate, then please do not forget to deregister with city hall. Deregistration and providing city hall with your forwarding address, makes it possible for the tax office to contact you abroad. Such contact will b e appreciated by you as that concerns the emigration income tax return that most of the time results in a refund. If the tax office does not have your new foreign address, the will not process the tax return.
