7 ms·

How do taxes work? If I, as a US citizen, move from the US to Netherlands and maintain my remote US employment, will I have to pay 50% income tax?

rizach8 4y ago
In Europe (and I think most of the world) you are taxed from the location you are "living". Often this can be bypassed for a while (6-12 months). While you may have 50% income tax in Netherlands. The cost of living may balance that out. For example by not needing a car, ever.
- TrueGeek 4y ago
  Sadly in the US were taxed no matter where we live. We have agreements with a lot (most?) countries though so we get "credit" for taxes paid to the country we are living in. The cost of living definitely balances things out. I just wish The Netherlands would change their stance on dual citizenship.
  - rizach8 4y ago
    The hardest part in Europe is that after a certain income bracket, your finances barely change.
  - markus92 4y ago
    Marry a Dutch citizen and you can keep your other citizenship ;)
    - TrueGeek 4y ago
      My wife is super not a fan of that plan. The alternative is to do a work visa and then resident visa until we're 65 and then we can "opt" for citizenship which does allow for dual citizenship. It's a much longer route though. UK is just easier for multiple reasons but comes with it's own bag of worms.
      - ThePowerOfFuet 4y ago
        France allows dual citizenship and you can apply after five years of residence. The fee is €55 (not a typo).
- shankr 4y ago
  > For example by not needing a car, ever. Ah yes no cars were ever seen on Dutch street. > The cost of living may balance that out They don't. Compare local purchasing power of any big European city with any American city. 9 out of 10 times, people in American cities would have higher purchasing power. Even Alabama and Mississippi have higher tech average wages than countries like Germany and Netherlands. If you move out of central/western Europe, things only get worse. https://www.visualcapitalist.com/us-states-top-tech-salaries-2021/ https://www.visualcapitalist.com/us-states-top-tech-salaries... Alabama ~$86,720/year Mississippi ~$71,720/year Germany ~46K Euros/year (googled) Netherlands ~59K Euros/year (googled) This doesn't even talk about how much higher taxes in these countries are. You will be paying almost ~40% (tax and social security) for these salaries in Germany and Netherlands.
  - lm28469 4y ago
    > They don't. Compare local purchasing power of any big European city with any American city. 9 out of 10 times, people in American cities would have higher purchasing power. Doubt, especially once you factor things like paid vacations, paid parental leave, healthcare, etc. The big difference is when you are an healthy young techbro, after that it equalize quite rapidly on average. Of course there are outliers but for the average software developer I'd say you're much better of in a European capital than in Alabama Lifestyles are also completely different and can't be priced in
    - shankr 4y ago
      You can compare cost of living on numbeo. We are talking about tech workers here. Most of the tech employers offer quite generous benefit in USA including healthcare, generous parental leaves and vacations. Also 401K is so common among tech workers in US. Those kind of retirement scheme aren't very common in Europe. You are almost always dependent on the public pension which is generally quite low. Almost everyone I have heard from who moved to US confirmed their bank balance got fatter. This is also true about people moving to Switzerland. Even with high costs in Switzerland, you make extra money and pay less taxes.
      - 4y ago
z9znz 4y ago
You won't get a visa to stay in NL beyond the default Schengen tourist visa. If you want permission to live in NL for longer, you'll have to apply for a residence permit. If you're American, you can get a DAFT self-employment visa for about 2k EUR total (app fee plus various other professional services to set it up). But then you absolutely will be filing NL taxes and paying NL taxes. They are indeed very high compared to US. You will also still be filing US taxes, although you won't owe the US since you will have already paid more in NL. I do not recommend NL for digital nomad who plan to stay longer than a "brief" visit of a month or two. If you're only staying a month or two, you're not a resident and won't have to bother with NL taxes. Also, winter is dark and sucky, and summer is heaven except for the new brief periods of VERY HOT days. Keep in mind that most places do not have air conditioning.
- ThePowerOfFuet 4y ago
  > But then you absolutely will be filing NL taxes and paying NL taxes. They are indeed very high compared to US. And healthcare costs that round to zero, and neither you nor your children will be shot.
  - withinboredom 4y ago
    Ha, I was about to say this! My son mangled his foot goofing off on a playground doing things he shouldn’t have been doing. The hospital visit was €30 after fixing his foot (he’s already back to normal, FYI), plus since he’s under 18, he doesn’t cost anything on my health insurance. Let’s also discuss the fact that if you live near any city, having a car is purely optional, and for less than €10 a month, you can get 40-50% off of public transportation costs through their subscriptions. So sure, you may pay an extra 10k a year in taxes, but no car payment, insurance, or healthcare costs probably makes up that 10k very quickly, if not in cash, then in peace-of-mind.
    - RestlessMind 4y ago
      I have kids and I live very peacefully in Silicon Valley. If you are a decent tech worker and have a job at a decent employer, you will get health insurance with a reasonable out-of-pocket maximum (mine is 6000USD for my entire family). That, combined with insurance premiums (around ~4800 for the whole year) is still only 11000USD per year, which is far more than the salary differential between Europe and the US. In short, you don't have to worry about healthcare expenses as long as you are employed by a decent tech company.
TrueGeek 4y ago
If you work for 90 days or less then nothing happens. If you work for 91+ days then you don't maintain your US employment. You must find new employment in The Netherlands and get a work visa. That may mean staying at your current company and switching from the US based company to their NL based company, but it's still a new job. You'll pay taxes in the NL, but you may get a SIGNIFICANT discount for the first 5 years as an IT worker [0]. You will still need to pay taxes in the US, but you'll get a discount of any taxes already paid to the NL so, effectively, you won't need to actually pay any taxes since taxes are higher in the NL. You'll still file every year. 0: https://www.expatica.com/nl/finance/taxes/the-dutch-30-ruling-explained-101641/ https://www.expatica.com/nl/finance/taxes/the-dutch-30-rulin...
jabbany 4y ago
You pay taxes to both. If there are treaties, then best case is you end up with a tax burden that is equal to whichever is higher. Treaties will usually let you claim credits for foreign taxes paid. Navigating how to apply for the treaty benefits will be a huge PITA though... In the worst case you may end up being double taxed on some aspects of your income. Sometimes treaties don't credit you for all types of taxes paid and tax-deferred/advantaged investment accounts (retirement or otherwise) may also not be fully recognized across jurisdictions, making them not actually tax-deferred/advantaged. Would be a large YMMV situation, though the silver lining is that figuring out how to navigate this would largely be a one-time cost.

rizach8 4y ago

In Europe (and I think most of the world) you are taxed from the location you are "living". Often this can be bypassed for a while (6-12 months). While you may have 50% income tax in Netherlands. The cost of living may balance that out. For example by not needing a car, ever.

TrueGeek 4y ago
Sadly in the US were taxed no matter where we live. We have agreements with a lot (most?) countries though so we get "credit" for taxes paid to the country we are living in. The cost of living definitely balances things out. I just wish The Netherlands would change their stance on dual citizenship.
- rizach8 4y ago
  The hardest part in Europe is that after a certain income bracket, your finances barely change.
- markus92 4y ago
  Marry a Dutch citizen and you can keep your other citizenship ;)
  - TrueGeek 4y ago
    My wife is super not a fan of that plan. The alternative is to do a work visa and then resident visa until we're 65 and then we can "opt" for citizenship which does allow for dual citizenship. It's a much longer route though. UK is just easier for multiple reasons but comes with it's own bag of worms.
    - ThePowerOfFuet 4y ago
      France allows dual citizenship and you can apply after five years of residence. The fee is €55 (not a typo).
shankr 4y ago
> For example by not needing a car, ever. Ah yes no cars were ever seen on Dutch street. > The cost of living may balance that out They don't. Compare local purchasing power of any big European city with any American city. 9 out of 10 times, people in American cities would have higher purchasing power. Even Alabama and Mississippi have higher tech average wages than countries like Germany and Netherlands. If you move out of central/western Europe, things only get worse. https://www.visualcapitalist.com/us-states-top-tech-salaries-2021/ https://www.visualcapitalist.com/us-states-top-tech-salaries... Alabama ~$86,720/year Mississippi ~$71,720/year Germany ~46K Euros/year (googled) Netherlands ~59K Euros/year (googled) This doesn't even talk about how much higher taxes in these countries are. You will be paying almost ~40% (tax and social security) for these salaries in Germany and Netherlands.
- lm28469 4y ago
  > They don't. Compare local purchasing power of any big European city with any American city. 9 out of 10 times, people in American cities would have higher purchasing power. Doubt, especially once you factor things like paid vacations, paid parental leave, healthcare, etc. The big difference is when you are an healthy young techbro, after that it equalize quite rapidly on average. Of course there are outliers but for the average software developer I'd say you're much better of in a European capital than in Alabama Lifestyles are also completely different and can't be priced in
  - shankr 4y ago
    You can compare cost of living on numbeo. We are talking about tech workers here. Most of the tech employers offer quite generous benefit in USA including healthcare, generous parental leaves and vacations. Also 401K is so common among tech workers in US. Those kind of retirement scheme aren't very common in Europe. You are almost always dependent on the public pension which is generally quite low. Almost everyone I have heard from who moved to US confirmed their bank balance got fatter. This is also true about people moving to Switzerland. Even with high costs in Switzerland, you make extra money and pay less taxes.
    - 4y ago

z9znz 4y ago

You won't get a visa to stay in NL beyond the default Schengen tourist visa. If you want permission to live in NL for longer, you'll have to apply for a residence permit. If you're American, you can get a DAFT self-employment visa for about 2k EUR total (app fee plus various other professional services to set it up). But then you absolutely will be filing NL taxes and paying NL taxes. They are indeed very high compared to US. You will also still be filing US taxes, although you won't owe the US since you will have already paid more in NL. I do not recommend NL for digital nomad who plan to stay longer than a "brief" visit of a month or two. If you're only staying a month or two, you're not a resident and won't have to bother with NL taxes. Also, winter is dark and sucky, and summer is heaven except for the new brief periods of VERY HOT days. Keep in mind that most places do not have air conditioning.

ThePowerOfFuet 4y ago
> But then you absolutely will be filing NL taxes and paying NL taxes. They are indeed very high compared to US. And healthcare costs that round to zero, and neither you nor your children will be shot.
- withinboredom 4y ago
  Ha, I was about to say this! My son mangled his foot goofing off on a playground doing things he shouldn’t have been doing. The hospital visit was €30 after fixing his foot (he’s already back to normal, FYI), plus since he’s under 18, he doesn’t cost anything on my health insurance. Let’s also discuss the fact that if you live near any city, having a car is purely optional, and for less than €10 a month, you can get 40-50% off of public transportation costs through their subscriptions. So sure, you may pay an extra 10k a year in taxes, but no car payment, insurance, or healthcare costs probably makes up that 10k very quickly, if not in cash, then in peace-of-mind.
  - RestlessMind 4y ago
    I have kids and I live very peacefully in Silicon Valley. If you are a decent tech worker and have a job at a decent employer, you will get health insurance with a reasonable out-of-pocket maximum (mine is 6000USD for my entire family). That, combined with insurance premiums (around ~4800 for the whole year) is still only 11000USD per year, which is far more than the salary differential between Europe and the US. In short, you don't have to worry about healthcare expenses as long as you are employed by a decent tech company.

TrueGeek 4y ago

If you work for 90 days or less then nothing happens. If you work for 91+ days then you don't maintain your US employment. You must find new employment in The Netherlands and get a work visa. That may mean staying at your current company and switching from the US based company to their NL based company, but it's still a new job. You'll pay taxes in the NL, but you may get a SIGNIFICANT discount for the first 5 years as an IT worker [0]. You will still need to pay taxes in the US, but you'll get a discount of any taxes already paid to the NL so, effectively, you won't need to actually pay any taxes since taxes are higher in the NL. You'll still file every year. 0: https://www.expatica.com/nl/finance/taxes/the-dutch-30-ruling-explained-101641/ https://www.expatica.com/nl/finance/taxes/the-dutch-30-rulin...

jabbany 4y ago

You pay taxes to both. If there are treaties, then best case is you end up with a tax burden that is equal to whichever is higher. Treaties will usually let you claim credits for foreign taxes paid. Navigating how to apply for the treaty benefits will be a huge PITA though... In the worst case you may end up being double taxed on some aspects of your income. Sometimes treaties don't credit you for all types of taxes paid and tax-deferred/advantaged investment accounts (retirement or otherwise) may also not be fully recognized across jurisdictions, making them not actually tax-deferred/advantaged. Would be a large YMMV situation, though the silver lining is that figuring out how to navigate this would largely be a one-time cost.