Income Taxes and Small Business in the NL

16 thoughts on “Income Taxes and Small Business in the NL”

  1. Hi, great info on the blog pertaining to US income earned abroad. I’m a US Military Veteran and I receive $37k a year in Disability payments (which is tax exempt in the US), would NL tax me under DAFT as I am using that income to live and operate in NL, as per their requirements for long term sufficient income. Thanks so much!

    1. Hi Nickolaus,
      Thank you for the kind words. I believe the first issue you would need to address is that DAFT requires that you are actually running a business that is engaged in commerce. Income from disability is not a business, so you would need to either find a different type of residence permit that permitted having an income without a business or start a business with your income. I suppose that starting a business would be problematic, though if you are on disability. I don’t think the Netherlands has any type of residence permit that allows someone with a set income to get a residence permit, but I’m not an expert. If you have any more questions, just let me know, and I’ll try to help.

  2. Hi! Does a portion of your taxes go to social security/pension, ensuring you receive payments when you’re older? I saw that you mentioned freelancers are “responsible for their own pensions,” but I wasn’t sure how it worked. Thanks!

    1. All persons must pay into the AOW Dutch pension scheme until they reach retirement age. For each year worked, you receive 2% of the pension amount, so you must work for 50 years while paying into the system to receive the full benefit. However, the pension amount is smaller than an average pension in the US, so most people also invest in their own pension plan.

  3. Sorry…one more question!

    I’ve been an expat before and my income was always taxed in my country of residence, and then I filed a tax return in the US (as well as the FATCA and whatnot), but I didn’t have to pay the IRS anything because my salary was under the threshold.

    So, if I did DAFT and had a US client, do you know if that would make the money earned liable to taxation in America? Would it matter if they deposited payment into a US account, as opposed to a Dutch one?

    Thank you! 🙂

    1. Hi Hallie,
      It works the same way here. When you file your US taxes, you can claim the FEIE (Foreign Earned Income Exclusion) for your earnings up to $102,100 (2017). That allows you to avoid paying US income tax on your earnings. Of course there are rules for whether you qualify for the exclusion, but if you are living and working here, it is easy to qualify.

      The source of the funds doesn’t matter. The Netherlands generally taxes all income earned. There are some exceptions, of course. The earnings must be claimed in the Netherlands and taxes paid, then excluded on your US return.

      1. Hi Jillian
        Thanks for your helpful info. Are you saying that it’s ok for the income to be sent to my U.S. bank account even though my company is a Dutch company as long as I claim my earnings in the Netherlands? Will the IRS find it weird that I’m being wired money to a U.S. bank account? I would rather I use my U.S. bank account and then transfer myself to my Dutch account to avoid high fees and also to make it easier for my client.

        Appreciate your help in advance, thanks!

        1. Hi Jessica,
          Glad you have found the info here helpful. We have had no issues with US clients paying into a US bank account and then transferring the funds through Transferwise or other transfer company to our Dutch bank account. In fact the majority of our income has been handled this way for almost 7 years. As far as the IRS, you will be filing to exclude your income earned in the NL (Form 2555 – Foreign Earned Income Exclusion) so they will be aware that you are making money and paying taxes in a foreign country. My only advice is to try to keep your US account strictly for business. That way if you have to prove what you are doing with those funds, it is not complicated with numerous personal transactions.

          Trying to get US clients to wire funds to the NL is difficult and expensive, so we gave up on asking clients to do this.

          Hope this helps!

  4. Hi Jillian,
    I found your blog particularly interesting. Our family of 4 (my wife is non-US) are awaiting for a final decision on our immigration case. We also hired a lawyer and opened bank accounts for our eenmanszak. I remained curious about our tax filling since I only lived in the US about 3 years in my childhood and never came back (precisely of horrible healthcare and education access). Thanks for the tips on the FEIE filling.

    1. Hi Christian,
      I’m glad that you found the blog helpful. Best of luck on your immigration application, and if you have any other questions, please just let me know.

  5. Hey Jillian – I just wanted to say thank you for your blog. It’s interesting and informative and I appreciate how authentic you are in your approach to communicating.

    My husband and I are going to move to the Netherlands at the beginning of 2020 and your blog is part inspiration and part impetus for being able to do so. So thanks!


    1. Hi Courtney,
      How wonderful that you are making the move to the Netherlands! Thank you for your kind words. I am so happy that you found the blog to be helpful. I’ve learned so much more in these past few months but haven’t been good about posting. Do look me up once you are here if you have any questions.


  6. Hi Jillian,

    I know these posts are old but I hope it’s ok if I comment and say that they, and your responses in the comments, are such a great source of information!

    We are at the start of investigating the DAFT visa process and I am planning to reach out to the lawyer you mentioned in your another post.

    Regarding taxes, may I ask if you have found The Netherlands’ wealth tax to be a burden? We have a fair amount of our retirement savings in Roth IRAs which I understand are considered assets rather than pensions and thus wealth-taxable, so I’m a bit worried about that.

    1. Hi Sarah,
      Thank you for your comments. I am glad you have found my posts helpful.

      Do contact Patrick for his assistance. He will be a great resource for you! He’s a great guy.

      My understanding is that the best way to think about the wealth tax is generally about a 1% tax in total on your wealth, with the first €30,000 (double for a married couple) being exempt from taxation. Here is a good article explaining it in more detail.

      Do let me know if you need anything else or have any other questions. Best of luck. It will be a great endeavor that I hope will be as beneficial for you and it has been for me and my family.


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