Migration from a U.S. tax perspective

In your first year moving from the United States to The Netherlands, you need to consider how you will treat your foreign earned income. Will you utilize the “Foreign Earned Income Exclusion” and exclude your income from U.S. tax? If so, you need to start tracking your travel days. You cannot visit the U.S. more than 35 days during a certain 365-day period to utilize the exclusion. Visiting the U.S. for longer periods may push back the qualification period so you need to file an extension, or even lose the exclusion.

To avoid making a costly tax mistake, be sure to track your days visiting the U.S. after your move. When you have plans to visit for more than 35 days in the year, consult your tax advisor to determine how it will affect your qualification for the Foreign Earned Income Exclusion.

When you have the 30% ruling, your days worked abroad may not be taxed in The Netherlands. Those days will always be taxed in the U.S. as they are no longer considered “foreign earned” and must be allocated to U.S. source income.

In the Dutch income tax return you can indeed deduct the work days when physically worked abroad the full day. A work days is a Monday-Friday. Even if you have worked in the weekend, it is not regarded a work day. The conditions the Dutch tax office sets for this refund is that you provide a calendar of the full year in which the days worked abroad are indicated. This calendar is signed by the employer, you have the 30% ruling and have the US nationality or green card status.

The moment you arrive in the Netherlands you can use your US driver license for maximum 183 days in the Netherlands. After that period you need to obtain a Dutch driver license. Unless you have the 30% ruling. Then you can simply swap the US driver license for a Dutch one with city hall.

In case you bring to the Netherlands a vehicle you have owned over a year before you arrive in the Netherland. Such a vehicle is not subject to import duty. This can been imported free of custom charges as house hold good, under the condition you keep owning the vehicle at least 6 months after arrival.

With your Dutch employer you can negotiate that the employer pays for the relocation costs. This is a tax free remuneration for the employee. If the assignment is for a limited period of time, the relocation costs back to the USA can be reimbursed by the Dutch employer as well. Condition is that such a remuneration is agreed upon in the employment agreement at the start of the employment.

Written by Arnold C.J. Waal van Orange Tax Services & Christie Hoendervangers DuChateau from BCN Tax