The Netherlands has an extensive network of agreements to avoid double taxation, which provide tax benefits to international investors who set up businesses there. Among those agreements is the treaty with the United States. The first agreement to avoid double taxation between the Netherlands and the United States was signed in 1992. The first amendment was made in 1993. The Double Taxation Agreement between the two countries was amended in 2004 to include new provisions for pensions, dividends, alimony and branches. In the Netherlands, taxes can therefore be levied on dividends transferred by a company in the United States to a company based in the Netherlands. Dividend tax rates are as follows: Here are some examples of certain types of income and which country is entitled to tax. What complicates matters further is that many states in the country also levy taxes on the incomes of their inhabitants. In addition to paying income tax, they must also pay public taxes. But under the contract, many U.S.

expats are prevented from paying taxes other than the income tax return. The agreement authorizes the country granted the right to tax the income of residents or expatriates. For example, the maximum federal income tax rate is 39.6%, but the maximum income tax rate in the Netherlands is 52%. Therefore, if you live in the Netherlands and receive a bonus from your U.S. employer, this bonus is subject to the full tax rate in the Netherlands. The tax treaty between the Netherlands and the United States follows the OECD tax treaty model, making it understandable to taxpayers. This contract can help determine whether a given income is tax-exempt in the Netherlands or not. It is important to note that the provisions of the tax treaty do not reduce the taxes that come back to the United States from expatriates, even though they live abroad. As citizens, they must continue to pay U.S. income tax, as required by the U.S.

Tax Code. The aim of the treaty is to avoid double taxation for Americans living in the Netherlands and Dutch citizens living in the United States, but the inclusion of a “savings clause” in Article 24, paragraph 1 of the treaty allows the United States to continue to tax its citizens living in the Netherlands, as if the rest of the treaty did not exist, so that the treaty does not prevent Americans living in the Netherlands from having to file US taxes. If you need full information on changes to the contract to avoid double taxation with the United States, please contact our Dutch business start-up agents. The U.S.-Netherlands tax contract provides for double taxation on income and capital gains taxes, but, as has already been mentioned, the benefits are limited due to a savings clause for U.S. expatriates living in the Netherlands.