No tax resident in the Netherlands, who does not want to be a foreign tax resident in the Netherlands. Well, I want to be a Dutch tax resident, but then again, I actually think tax is exciting. However, my opinion is not shared by everybody, but my fan base is growing.
No tax resident in NL
The desire to be no tax resident in NL and at the same time residing in the Netherlands and use all the facilities the Netherlands offer, can be a dream. Dreaming is ok, but reality is the opposite. The determination of you being a tax resident or not is set by facts and circumstances.
Facts and circumstances determine your tax residency
Facts are clear. You live at a Dutch address, you work with a Dutch employer, you purchase your groceries with the Albert Heijn. You are a Dutch tax resident.
Circumstance are less clear. You have a foreign address, but your wife and children live here. They attend school and do their shopping in the Netherlands. Or you have multiple houses, none rented out, but the Dutch house receives all the mail, has the high heating invoices etc. A Dutch address in your navigation is labelled as home address. Indeed scary and silly, but was part of a court case.
no Dutch tax resident – court case
The shareholder managing director of a hobby and collectors packaging company – no idea what that is – claimed not to be a Dutch tax resident. The Dutch tax office challenged that statement and started an investigation.
The Dutch tax office requested for all of his bank statements and the bank statements of his wife. Both Dutch and Luxemburg bank statements. Moreover, the tax office asked for the print out of the current account he has with his company. A current account is the bookkeeping ledger in which private spending is booked. That is something the shareholder needs to pay back to the company.
Telephone invoices, emails he send and his business partner send during the period of 2013-2015. The personal asset overview starting from 2003 was requested for.
The shareholder made a complaint against the size of information requested, to which the tax office agreed, so only information with respect to himself he only needed to provide.
The court decided as follows
The shareholder also appealed against this information request and went to court. The court ruled that the shareholder does have a Dutch address, a number of cars with Dutch license plates, a number of Dutch telephone numbers and was very active flying in and out of the Netherlands. Moreover, his economic ties with the Netherlands were very strong. I assume the company was based in the Netherland. And the shareholder spend quite a few longer periods in the Netherlands. The court had the opinion that the information requested by the tax office would indeed make it possible to determine whether the shareholder was or was not a tax resident in the Netherlands.
Denied by the court was the claim of the shareholder that the size of the information requested was out of proportion. The court denied the claim that the principle of prudence was harmed. The court denied the claim of detournemnet de pouvoir (misuse of power by the tax office). And the court denied the claim of fair play.
The court ruled that what the tax office asked for is reasonable to determine the tax residency.
Tax is exciting
In my opinion, if you have nothing to hide, no need to go to court to stop the tax office asking so much information. I do agree the tax office asks for a lot of information, but then again, the shareholder his life was made a bit complex to rise a possible smoke screen tax wise.
Bottomline, tax residency is determined by facts and circumstances and exactly that was exactly what the tax office was doing in this court case. Collect the facts and take into account the circumstance.
If you have a doubt whether you are or are not a Dutch tax resident, please contact us and we work with you to see what is the case.
