Capital gain tax on investments abroad

Hi and welcome to the Forum.

The only part you don't seem to have covered is the Dutch Social taxes; these taxes are not covered by the DTAA and are levied on your worldwide income; my advice would be to speak to a Dutch tax expert to ensure that you have claimed all you can to offset the impact of these taxes.

Hope this helps.

Cynic
Expat Team

Hi Cynic,

Thanks for your reply.

From my understanding DTAA covers dividend payments. But I am not sure regarding the capital gain tax. I would have imagined this would be a very common scenario here in NL for expats. I found quite some blogs regarding DTAA for dividend taxation, abroad rental income and abroad pension, but nothing so far regarding capital gain tax and DTAA.

Best,
NP

Niravparekh21 wrote:

Hi Cynic,

Thanks for your reply.

From my understanding DTAA covers dividend payments. But I am not sure regarding the capital gain tax. I would have imagined this would be a very common scenario here in NL for expats. I found quite some blogs regarding DTAA for dividend taxation, abroad rental income and abroad pension, but nothing so far regarding capital gain tax and DTAA.

Best,
NP

It caught me by surprise and cost me a fortune.  My advice is to go speak to a Dutch tax consultant.

I am trying to figure this out as wel.

So for I understood that if you live in the NL you don't have to pay US federal income tax.

As for State income tax one could move to a mailbox to a state that doesn't charge income tax (Digital Nomad) . Or if I read it right I can make use of the California "Safe Harbor Act" to avoid having to pay income tax over any capital gains tax we might have had (negative this year :-(

Still from what I understand is that one has to declare foreign assets to the Dutch Belastingdienst. And that they assume you made a capital gains on your savings and investments.

Tax deferred investments like 401k - IRA - SEP are excluded until you draw income of course.

Is this true?

Say one had a million dollars invested in the stock market and made no capital gains.

Does one still have pay dutch taxes over this and how much would that be? Assuming there are no other income sources or deductibles.

Very curious to see the replies.

Rogier

I am trying to figure this out as wel.
So for I understood that if you live in the NL you don't have to pay US federal income tax.
As for State income tax one could move to a mailbox to a state that doesn't charge income tax (Digital Nomad) . Or if I read it right I can make use of the California "Safe Harbor Act" to avoid having to pay income tax over any capital gains tax we might have had (negative this year :-(

Still from what I understand is that one has to declare foreign assets to the Dutch Belastingdienst. And that they assume you made a capital gains on your savings and investments.
Tax deferred investments like 401k - IRA - SEP are excluded until you draw income of course.

Is this true?

Say one had a million dollars invested in the stock market and made no capital gains.
Does one still have pay dutch taxes over this and how much would that be? Assuming there are no other income sources or deductibles.

Very curious to see the replies.

Rogier
-@fauxminces0f

Hi and welcome to the Forum.

I'm not a tax expert (so Caveat emptor), but my understanding based on my own falling out with them some years ago now, is we get this wrong by continually speaking in terms of "paying tax".  What in fact happens is we are "assessed" for tax.  Whether we have any liability to pay and get a bill very much depends on what you say and what the rules were in the tax year(s) you are being assessed, normally these assessments are via some form of declaration.  This is why tricks like having a PO box in another state are probably just a good revenue earner for the US mail and I don't think US citizens can be digital nomads in the USA (at least as far as the Federal taxes and the IRS are concerned, state taxes may be different).

As far as the Dutch Belastingdienst are concerned, if you are deemed as being resident in the Netherlands, you will be asked to make a declaration of all of your worldwide income, for the previous 12 months and have to provide evidence to support anything you say (bank statements etc).  The tax agreement between the Netherlands and the USA is basically about double taxation on income, business taxes and pensions.  The Dutch have social taxes which fall outside of the tax treaty, these are "assessed" on your worldwide income, so the money you have received, they don't really care where it comes from or what you call it at this stage, that's what the Treaty is about.  Also, if you forget to declare something because you thought that Capital gains for example didn't apply, then you've just broken the law and life becomes tedious.  The number 1 rule as far as they are concerned is you declare everything, they will decide whether it is relevant.

My advice to all of us who have complicated tax affairs, go and speak to a tax expert, in this case preferably one who routinely deals with the Dutch Belastingdienst.

I hope this helps.

Cynic

Expat Team