Change in opting to resident taxpayer

New rule for non-resident tax payer to opt as a resident taxpayer

Someone who lives abroad and earns income in the Netherlands can choose to be treated as a resident taxpayer. One advantage of doing so is that one is eligible for the same deductions as a resident of the Netherlands, such as the mortgage interest deduction for the main residence (abroad), deduction of annuity premiums, personal deductions and tax credits.

This option scheme, however, lapses as of 1 January 2015. In its place will be a stricter regulation. Only qualifying non-resident tax payer can opt.

A qualifying non-resident taxpayer is someone who:

• Is a resident of a Member State of the European Union, Liechtenstein, Norway, Iceland, Switzerland or the BES islands an
• More than 90% of their world income is treated by Dutch payroll or income tax and
• Produces a declaration of income from the tax authorities in their country of residence.

The definition of tax partner will also be adjusted. The partner of a qualifying foreign taxpayer will only be regarded as a tax partner if:

• They meet the basic conditions for tax partnership and 
• The partner also qualifies as a non-resident taxpayer or at least 90% their collective income is taxed in the Dutch payroll or Dutch income tax.

The new rules will affect your tax position if you have chosen to be treated as a resident taxpayer under the current regulation. It could affect for instance the off-set of the mortgage deduction. Timely consultation with us is therefore advised in order to avoid any undesirable consequences.