Avoiding double taxation as a US expat living in the Netherlands

Avoiding double taxation as a US expat living in the Netherlands


Navigating the tax landscape as an American expat in the Netherlands can be challenging. US citizens residing in the Netherlands need to understand how to effectively manage both their US and Dutch tax obligations to avoid double taxation from both countries.

Expats Overseas helps US expats in the Netherlands understand and fulfil their tax obligations.

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Annual tax filing in the US and the Netherlands is mandatory

As a US citizen or green card holder living in the Netherlands, you are obligated to file tax returns in the US every year, regardless of your residency. The US has a citizenship-based tax system, which means that your worldwide income is taxable. Consequently, you must file tax returns in both the US and the Netherlands.

Minimising additional tax liability

Often, you will owe little to no additional taxes if the rules are correctly applied. The taxes paid in the Netherlands can usually be offset against your US tax obligations (Form 1116). Several mechanisms facilitate this, such as the tax treaty between the US and the Netherlands and the Foreign Earned Income Exclusion (Form 2555) which exempts the first $120.000 of foreign income from US tax (adjusted annually).

Understanding US filing deadlines and extensions

US expats are granted an automatic two-month extension for filing US taxes, typically extending the deadline to June 15. Keep in mind, however, that if the day falls on a holiday or weekend, the deadline shifts.

Requesting further extensions

You can request further extensions using Form 4868, potentially prolonging the deadline until October 15 or, in some cases, December 15.

FBAR deadline

The deadline for the FBAR (Foreign Bank Account Reporting) is April 15. If you do not file in time, then you are permitted an automatic extension until October 15.

The importance of FBAR for US Expats in the Netherlands

The FBAR requires you to report the highest balances of your foreign bank accounts annually. Your Dutch bank accounts and other non-US accounts are considered foreign in this context.

Who needs to file an FBAR?

If you had financial interests or foreign bank accounts with an aggregate value exceeding $10.000 during the calendar year, then you are obligated to file an FBAR.

Although FBAR filings don't lead to direct taxation, failure to comply can attract substantial penalties from the IRS.


Catching up on your US tax filings

If you're behind on your US tax obligations, or you weren't aware of your filing requirements while living in the Netherlands, the IRS' Streamlined Procedure allows you to update your filings without penalties. This involves submitting the last three years of tax returns and six years of FBARs.

Maintaining a US bank account

Keeping an active US bank account is advisable for receiving government benefits like refunds and ensuring smooth financial transactions, particularly crucial for retirees in the Netherlands.

Seeking professional guidance

Consulting with tax professionals experienced in US and Dutch tax regulations is strongly advised. Incorrect filings can lead to double taxation, fines, and / or other legal complications which are often costly to solve.

Experts in US expat taxation

Expats Overseas helps US expats in the Netherlands with their taxes. Founded by American expats in the Netherlands, they have a deep understanding of how to accurately apply the US - NL Tax Treaty as well as tax credits.

Their company offers an easy-to-use tax organiser for submitting your information in one go, along with competitive pricing and a fast turnaround time of just four weeks (after receiving all needed information and documents).

Expats Overseas places a high value on personal service, ensuring accessibility and responsiveness to their clients. With over 1.000 reviews, they have assisted more than 18.000 individuals with their tax needs and proudly maintain a 4,8-star rating on Trustpilot. Contact their team free of charge and without any obligation.



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