Holidays are coming and you travel to your US family. To spend more time there you travel earlier and continue to work in the US around the holidays. Working abroad as US national and 30% ruling, what are the tax implications?
Working abroad as US national and 30% ruling – regular situation
The criteria is that you pay tax over your employment income in the country where you are actually performing the work. The moment you are a Dutch tax resident and you work for a Dutch company, there is no issue. But then you are hired by a foreign employer, what then?
Working in the Netherlands for foreign employer
The moment you are contacted by a foreign employer to work for that company, tax becomes dynamic. If you perform the work in the Netherlands, this foreign employer needs to set up a Dutch payroll and you are subject to Dutch tax and Dutch social premiums. We can help you with that.
In the situation your employer is in a tax friendly country such as the emirates, you can process the work in the emirates. That said, if your partners stays in the Netherlands in the home you both own. Or if the summers are too hot for you and you stay in your Dutch home you own, or you keep on your Dutch home without renting it out, tax becomes more dynamic.
The Dutch tax office has the opinion you remained a Dutch tax resident, as your central point of live (your home, your partner and home) remained in the Netherlands. Your world wide income is to be reported in your Dutch tax return. A double taxation relief is provided for income taxed abroad, but what if the income was not taxed? Then no double taxation relief. Keep that in mind.
Working abroad for less than 183 days
The moment you are send by your employer to assist a client in Germany for a week, then in France for a week, then in Thailand for a week. You have a fun employer. However, if that means you have to complete a Dutch, German, French and Thai tax return at the end of the year, you have a horrible employer. You refuse to go abroad.
To prevent you from being taxed for work abroad that took less than 183 days, the income is only taxed in the Netherlands.
Working abroad as US national and 30% ruling
The 30% ruling is already a fun ruling for those who benefit. 30% of your salary is not taxed. If you have the US nationality or a US greencard it can be more fun.
Due to the fact that a US national is taxed based on nationality and the fact that the 30% ruling offers the deemed non resident tax status. This combined situation makes you a true non resident tax payer living in the Netherlands! More dynamic it does not get.
This implies you can only be taxed for the days you actually worked in the Netherlands. Better said. You can deduct from the Dutch tax burden the number of days you were physically working outside the Netherlands.
For this to be applied we need your US passport/Greencard copy, a list of days you worked physically the full day abroad, signed by your employer and a copy of the still valid 30% ruling for that applicable period. Then the income you deduct in your Dutch tax return at probably 49,5% tax, is then to be reported in the US tax return. I believe a lower tax applies in the US.
The above situation applies to having worked abroad. Abroad is not limited to the USA, but does imply working. Holiday abroad, working in the weekend abroad does not apply.
Tax is exciting
We think tax is exciting. Excited we get already about assisting you with a foreign employer employing you. But also helping you claim some tax back as US national holding the 30% ruling working abroad.
