Tax credits for foreign tax payers prompt parliamentary questions

With effect from the first of January 2019, foreign tax payers will no longer receive the tax component of their tax credits as part of their payroll tax. The change has been inspired by the wish to stop subsequent reimbursement having to be made in an income tax context by the 350,000 or so foreign tax payers who lack entitlement to such tax credits. The 130,000 or so foreign tax payers who are entitled to the same tax credits as domestic tax payers by contrast will be able to cash in as early as in the course of the calendar year, by means of a provisional income tax return.

The State Secretary for Finance in response to parliamentary questions concerning the change has explained that the scope for monitoring and tax collection has been instrumental in the decision to confine the category of recipients of tax credit payments as part of a provisional tax assessment to foreign tax payers who have been confirmed as being eligible for such credits. Newly eligible foreign tax payers will receive their tax credits through the provisional tax assessment in subsequent years as soon as it has been established that they are eligible, without their having to file a fresh application annually.

The double taxation convention between the Netherlands and Belgium provides for a specific non-discrimination clause by virtue of which Belgian residents who are liable for Dutch income tax are proportionately entitled to personal rebates, allowances and reductions including particular tax credits. It is for reasons of implementation that these tax credits are granted in their entirety irrespective of what portion of the global income is liable for tax in the Netherlands.

Dutch version: Kamervragen heffingskortingen buitenlandse belastingplichtigen