ESTABLISHING YOUR TAX RESIDENCY
The double taxation agreement between the Netherlands and Ireland states that air transport workers are taxable in the country of tax residency.
Dutch tax principles state that an individual is considered to be a resident of the country where he/she has the centre of his/her life interest.
It is possible to be tax resident in two countries at once. In such a case, your tax liability on your worldwide income is determined by agreement between the two countries based on the double taxation agreement between them. It generally falls back to where the centre of your vital interest lie. See below for examples.
You must be tax/fiscal resident in at least one country.
Dutch tax residency concept has been developed by case law but here are some examples of what will be considered:
(a) You shall tax resident of the country in which you have a permanent home available to you. If you have a permanent home available to you in both your home country and country of work, you shall be deemed to be a resident of the country with which your personal and economic relations are closer (centre of vital interests). Factors that can be considered to establish centre of vital interests include;
- Where you have a house/home (this may include a family home that you stay in when you stay in the Netherlands or are registered at)
- Where your family resides
- Where you stay on days off
- Where your bank accounts are established
- Whether you remain on the Dutch municipal register
(b) If the country in which you have your centre of vital interests cannot be determined, or if you do not have a permanent home available to you in either country, you shall be deemed to be a resident of the Contracting State in which you have an habitual abode;
(c) if you have an habitual abode in both countries or in neither of them, you shall be deemed to be a resident of the Contracting State of which you are a national;
(d) if you are a national of both countries or of neither of them, the competent authorities of the countries shall settle the question by mutual agreement.
Every client situation is different and will be judged independently by the tax authorities so it is important to seek advice from the Belastingdiest if you cannot determine your residency status by the above guidelines. It is your responsibility to correctly assess your tax residency status and O’Connor and Associates will not be held responsible for failure to do this. Nor can O’Connors make the determination for you.
If It is decided that you are not Dutch tax resident and are payrolled in the Irish payroll but not living or working in Ireland, you must seek independent advice on filing your tax return and paying tax in the correct country of tax residency. We recommend you apply for a certificate of residency from that country. Failure to do so may result in the Dutch tax authorities seeking a taxation claim on your overseas income.