Double taxation expirience - Italy - Netherlands

Hello everyone,

I will be moving to the Netherlands begin of 2020 and am currently in the process of preparing myself for the move, papers, etc.

One point it's not 100% clear to me yet, no surprise once talking about taxes :), is about the double taxation I may incur considering my scenario and the process

- Dutch employer as only source for my income
- My family will continue to stay resident in Italy for the first year at least, this will determine that my fiscal residence will also stay in Italy for the time being
- Consequence of this is that I will need to declare my Dutch income to the Italian tax authority, this can determine a "credito d'imposta", until I can present my definitive Dutch taxes report. I am not sure if I will have to pay in advance also the Italian part of taxes and recover them later or not.

Is anyone aware or has experience with a similar situation?

thank you very much in advance for the feedback
Massimiliano

Hi and welcome to the Forum.

Taxation doesn't work like that; you are assessed individually for taxes on your worldwide income, based on where you are deemed as being resident; where your family are resident is irrelevant.  If you work in the Netherlands, you will be deemed as being resident there and tax will be deducted from your salary at sources (i.e. before you get it).  If a double-taxation agreement exists, it basically says that you won't be taxed on the same income twice, so if the Dutch tax you, the Italians take that into account and don't tax you again (and vice-versa).  So you will need to keep copies of your Dutch tax return (compulsory annual event) and your payslips for the Italian tax authorities.

Where it becomes difficult in the Netherlands, are Social Taxes as they are specifically NOT included in any double-taxation agreement and if you are resident and under state retirement age, you will pay them and they are extensive (27% of salary).

Where I came unstuck was I came from the UK and the tax year there was Apr > Mar but in Holland was Jan > Dec, the Dutch will assess you on social taxes for the whole previous tax year, so I got hammered for 27% of my previous 15 months salary (Yes, I moved there in December!  I wish I'd known and waited a few weeks.

Hope this helps a bit.

Cynic
Expat Team

Thank you Cynic!

thank you for your explanations, I am trying to begin from 01.01.2020 to avoid fiscal periods overlapping as much as possible.

I also am convinced that the double taxation agreement should avoid me surprises, however the Company tax consultant service offered with the relocation package did warn me about this possibility because the tax filing periods in the 2 countries are mismatching. Not a big deal but something that is good to know in advance ;)