Reader question: 2019 tax return as a non-resident taxpayer and exemption from wage tax and national insurance contributions 2020
Dear readers,
I have been deregistered in NL since 31-Dec-2018 (I now know that this was a bad choice, I should have deregistered per 1-Jan-2019, but done is done!). For 2019 I filed a declaration for the PIT in TH and paid tax. Subsequently, I received form RO21 (Income Tax Payment_Certificate) and form RO22 (Certificate of Residence) from the Thai tax authorities. I sent these 2 forms (plus 7 other appendices) together with the form 'Application for exemption from Wage Tax' to the Tax Authorities in Heerlen. I am now waiting for the result of this application (can take up to 10 weeks!). As far as I understand, the exemption is not granted retroactively over previous years.
For 2019 I also have to file a tax return in NL as a non-resident taxpayer, which is done online via the site 'My Tax Authorities'. In 2019, I did not yet have an exemption from payroll tax because I was only able to apply for it in 2020 after first paying tax in TH for 2019. So in 2019, payroll tax was withheld in NL on income that was only taxable in Thailand (according to the tax treaty between NL and TH). How can I reclaim this overpaid tax? From previous posts on Thailandblog I have the following information from Lammert de Haan
Lammert de Haan says on 5 May 2019 at 21:10:
In accordance with the example given by the Tax and Customs Administration, you state the full amount of AOW benefit in your income tax return. In the appropriate section, you indicate that the Netherlands is not allowed to levy taxes on this income. In this way double taxation is avoided.
Lammert de Haan says on 7 May 2019 at 12:08:
If someone has not been able to obtain an exemption, as a result of which wage tax has been withheld from his or her private pension or annuity payment: don't worry. The Team Wage Tax for Private Individuals is responsible for issuing the exemption. But if you subsequently file an income tax return, you will be sent to the Income Tax Team and you will receive a refund of the wage tax withheld almost by return.
In my case it is not about the AOW but about pension and annuity payments. In the online declaration as a non-resident taxpayer you can indicate per income on which amount NL is not allowed to levy. This does not ask for any additional information or any proof at all. This is in contrast to the application for exemption from payroll tax, for which all kinds of extra information must be provided (I have sent a total of 9 attachments with the application).
My question now is: are all amounts stated in the declaration as a non-resident taxpayer on which NL is not allowed to levy accepted? It makes a lot of difference whether or not this is accepted. If so, I will get a decent amount back (and rightly so, after all, I wrongly paid twice) but if not, I will still receive a considerable assessment because too little tax has been paid!
Regards,
Gerard
Gerard, I can't imagine that L. de Haan writes somewhere that the Netherlands is not allowed to levy on the state pension after emigration to Thailand. In that case, AOW will remain taxed in NL and if you take your AOW to Thailand IN the year of receipt, it will also be taxable in Thailand. The old treaty that is currently in force does not include the paragraph to keep Thailand from touching your state pension.
You must file a declaration in NL for 2019; your emigration was in 2018 (you must have filled in a bulky M-form with the pen…) so you have to fill in a C-form online. Under 'Pensions and other benefits' there is the question whether or not that income is fully taxed in the Netherlands. There you have room (you have already seen that yourself) to indicate which amount is not taxed in NL. And you can count on the tax authorities to check whether you enter it correctly!
You don't ask 'back'; you declare what is taxed in NL and the tax due rolls out. If the wage tax withheld is higher, you will be refunded the difference. If the tax authorities want otherwise, you have the right to object and appeal.
Eric, thank you for your comment!
I probably wasn't clear enough, sorry.
I know that the AOW is taxable in NL and not in TH insofar as it is not transferred to TH. I tried to say that no tax was paid on the AOW in TH for 2019 because the AOW was not transferred to TH and therefore the AOW was not double taxed. I did transfer my pension and annuity payments to TH and tax was paid in TH and because payroll tax was withheld, tax was also paid in NL.
I filled in the M form with the pen for 2018 last year. That didn't make me happy, what a dragon of a form that is!
You say: “And you can count on the tax authorities to check whether you enter it correctly”!
This is exactly my point: how do they do that if no further information or evidence is requested at all? This is in contrast to the application for exemption from payroll tax, where everything has to be declared and proof is requested. I find this very strange because in my opinion these 2 things come down to the same thing, namely no tax due on certain income in NL.
Gerard, the service knows better than you how your income works and because you are an emigrant throughout 2019, your entire pension income is not taxed in NL (unless it is a state pension, but you do not write about that).
I took out my own C-note from one of those years.
In the question in question, I entered the entire pension X,000 and the payroll tax 0, and then the question follows: which part is not taxed in NL? There I entered X.000. I only have one pension, the math is easy. If you have more than one pension, the civil servants will be happy to check it. It becomes more difficult if you emigrate in the middle of the year because then you will divide the pension over time, but that is not necessary for you. No one has asked me anything further from Heerlen, the report has been followed.
For the sake of completeness: was the income-related premium under the Healthcare Insurance Act also deducted from you in 2019? You will not receive this back on this tax return, but you must submit a separate request for this to the Utrecht tax authorities.
You think the M form is a dragon? Totally agree with you……!
Gerard, Erik has described it well above and use it to your advantage.
I have a similar situation with AOW + annuity taxable in NL and private pensions taxable in Thailand. Thailand taxes the income brought in and in my case I only send the private pensions to Thailand and the rest stays in the Netherlands. I can do that because I get my annual visa based on the bank balance and not on the basis of (brought in) income. I use my AOW for my Paris-based health insurance, among other things.
I advise you to see whether AOW and annuity can remain in the Netherlands and if you have a credit card charged to your Dutch bank account, you can make purchases at many shops and mail order companies with your credit card without transferring your AOW + annuity to Thailand. and runs into possible double taxation.
Incidentally, in my opinion you do not have to give the certificate RO 21 to the Dutch Tax Authorities because RO 22 indicates that you are a tax resident of Thailand and the Dutch Tax Authorities do not need to know more in my opinion. In the past, I myself have only submitted RO 22 and then received my exemption from withholding wage tax.
Success!
Hi Rembrandt,
You write that your AOW benefit and your annuity benefit are taxed in the Netherlands. However, your annuity payment is in principle taxed in Thailand and then insofar as you bring it into Thailand in the year you enjoy it, because otherwise it is not income but savings.
Just read what the Treaty for the avoidance of double taxation concluded between the Netherlands and Thailand contains:
“Article 18. Pensions and annuities
1 Subject to the provisions of paragraph 19 of this Article and paragraph XNUMX of Article XNUMX, pensions and other similar remuneration in respect of past employment shall be paid to a resident of one of the States, as well as paid to such resident annuities taxable only in that State.
2. However, such income may also be taxed in the other State to the extent that it is as such an expense of profits made in that other State by an enterprise of that other State or by an enterprise which has a permanent establishment therein.”
In other words: only if your annuity payment “as such” is charged to the profit of a Dutch insurer, then the Netherlands may ALSO levy on this.
You may then be faced with one of the settlement methods referred to in Article 23 of the Treaty, in order to avoid double taxation.
About 7 years ago, the District Court of Zeeland – West Brabant, location Breda, issued a number of judgments in quick succession, in which the right to levy tax on annuity payments from AEGON, among others, was awarded on the basis of Article 18, paragraph 2, of the Treaty. to the Netherlands, as the Court held that these payments were charged to the profits of the Dutch insurers. A weak point in these rulings is that there was no mention of the reduction provision referred to in Article 23 of the Treaty.
Unfortunately, no appeal has been lodged against these rulings.
So far it has remained with these statements. For my Thai clients, I always mark an annuity payment as being taxed in Thailand. It is up to the Tax and Customs Administration to prove that the situation observed at the time with respect to AEGON, for example, still exists today. I'm not assuming in advance that this is still the case.
Recently I happened to have a conversation about this with an employee of the Tax and Customs Administration/Office Abroad. Although it was initially about an incorrect settlement of an M-form by the tax authorities, my client's annuity payments were also discussed. I pointed out my point of view to this employee, with the result that the declaration was also followed on this point.
With your comment about making purchases using your Dutch credit card, you are walking on thin ice. Soon there will be input (and also immediately spend again) of income in Thailand and therefore fall under the Personal Income Tax. One point, however, is: how do you check that as a Thai tax official. My experience is that these civil servants are not really skilled in the control theory. But strictly formally it is not correct!
You are very right with your comment about only sending the Declaration of tax liability for the country of residence (RO22) to the Tax and Customs Administration/Office Abroad. Do not submit the declaration form (PND91) and the certificate RO21. Don't make them wiser in Heerlen than is strictly necessary!
Dear.Lammert,
thank you for our detailed explanation. In the past I have based myself on the applicable jurisprudence and have therefore had annuities taxed in the Netherlands. That also seemed logical to me because at the time I also deducted premiums in the income tax return. In the meantime, annuity payments have ended for me, but Thailandblog readers can benefit from your point of view and perhaps have a little fight with the tax authorities.
What you write about my advice to make purchases with a Dutch credit card is correct and I absolutely do not want to encourage tax evasion and advise everyone to take your comment into account.
Hi Rembrandt,
I like the idea that you had your annuity payment taxed in the Netherlands because you enjoyed a tax benefit during the accrual phase. But this tax relief also applies to your pension benefit.
The question is to what extent you were able to deduct the deposit or premiums during the accrual phase of the annuity due to the often small so-called "annual scope". And if that is the case, then you do not owe income tax on the non-tax-facilitated part, even if you live in the Netherlands. This is all too often overlooked when living in the Netherlands, resulting in many Dutch people paying too much income tax on their annuity payments!
The Netherlands has only limited taxation rights with regard to foreign taxpayers residing in Thailand. It has deliberately assigned the right to tax private pensions and annuity payments to Thailand by Treaty.
Only when a pension or annuity payment is deducted from the profit of a Dutch company, the Netherlands may also levy on it, in addition to Thailand.
But against this limited right to tax, there is a total lack of possibility for you to deduct, for example, mortgage interest, alimony obligations, specific healthcare costs, gifts to, for example, the Refugee Foundation and so on. In addition, you are not entitled to tax credits.
In this way, the Netherlands will certainly get its money's worth when it comes to levying your AOW benefit (in due course). So the “love” does not come from one side.
So you certainly did not have to feel “guilty” by having your annuity payment taxed by Thailand at the time, on the basis of Article 18, paragraph 1, of the Double Taxation Treaty concluded between the Netherlands and Thailand.
I also permanently left for Thailand in 2018 and have filed a declaration in Thailand for 2019 of my pensions. No state pension either, I put that in a savings account in the Netherlands.
Then applied for an exemption sometime in February, only sent the RO 21 form that I was a tax resident in Thailand in 2019, because it is none of their business how much tax I pay here. This exemption was granted two weeks ago for 5 years with retroactive effect from 1 January, with the exception of the state pension.
Also filed a tax return for 2019, I will get back the part that I was taxed for in Thailand soon.
Incidentally, I honestly do not understand why you do not ask your question to Mr de Haan, who is also the specialist here about tax returns and deductions in Thailand.
I emigrated to Thailand on April 1, 2015 and had an ordinary salary in the preceding months and 2015 early retirement benefits from mid-2 to December (I still have those 2 early retirement benefits). For 2015, I paid full tax in Thailand in March 2016. With those Thai forms I applied for and received an exemption in Heerlen, of course not with retroactive effect. I also completed the “infamous” M form for 2015 in 2016, stating that I had paid Thai tax for 2015. The NL tax refund for 2015 was a considerable amount!
Of course I also paid Thai tax for 2016 in 2017 and I received all payroll tax for my exemption via the NL form.
I also received a one-off payment in 2018 for which I could not apply for an exemption, which I received back in 2019 after consultation with Heerlen, which, by the way, has everything handled by the tax office of the province where you last lived in NL ( for me that was Almere).
Hello Gerard,
The first quote from me you reproduced, without placing it in the context in which it took place, gives a completely distorted picture.
As a tax specialist, specialized in international tax law, you are constantly looking for ways to avoid tax. So when I came across a webpage of the Tax and Customs Administration containing such an option, I jumped right into it.
I would advise you to read the entire text again. You can find it under the following link:
https://www.thailandblog.nl/lezersvraag/beroep-doen-op-de-regeling-voorkoming-dubbele-belasting-in-nederland-en-thailand/
In the meantime, this construction no longer applies as this web page has been removed by the Tax Authorities, so that you can no longer derive any rights from it: there is no longer any question of aroused confidence!
It is then easy to guess why this web page has been removed!
Before and also afterwards I explained several times that, with regard to social security benefits (including AOW, WIA, WAO and WW benefits), national law applies to both the Netherlands and Thailand and therefore both countries have may levy such a benefit.
Dear Lammert de Haan,
My apologies regarding your first quote. It was absolutely not my intention to paint a distorted picture!
All I really cared about was the text:
“In the appropriate section, you indicate that the Netherlands is not allowed to levy taxes on this income. In this way, double taxation is avoided.”
I wasn't concerned about the AOW at all, but I now realize that by using this particular quote of yours I may have given the wrong impression regarding the AOW.
I have learned a lot from the expert information on tax matters that you regularly post on Thailandblog and I am grateful to you for that! I really appreciate the effort you take to help people!
Again, My apologies!