Navigating & understanding double taxation as a ZZP’er

For expat freelancers in the Netherlands, working internationally often raises questions about taxation. 

One of the shared and biggest concerns is double taxation—being taxed on the same income by two different countries. Fortunately, the Netherlands has measures to prevent this financial strain. 

In this blog, we’ll explore who is affected by double taxation, how it works and how you can navigate it to ensure you’re not paying more than you owe.

What Is Double Taxation?

Double taxation occurs when two countries claim the right to tax the same income. For freelancers, this is a common issue if:

• You’re a resident of the Netherlands but earn income from clients in countries without tax treaties with the Netherlands.
• You split your time and work between multiple countries.
• You’re considered a tax resident in two countries.

This issue is especially relevant for expat freelancers who operate globally, work remotely or maintain client bases across borders.

When does Double Taxation apply?

Double taxation generally applies to freelancers in these scenarios:

• Tax residency: The Netherlands considers you a tax resident if your primary residence, family life, or main economic activities are based here. Tax residency means you are taxed on your worldwide income in the Netherlands. Meanwhile, another country might also consider you a tax resident based on its own rules (e.g., time spent in the country or income sourced there).
• International clients: If you’re earning income from clients in a country that requires withholding tax, you could face taxation both in that country and in the Netherlands.
• Cross-border work: If you travel frequently for work and perform services in multiple countries, the income earned in each country may be taxed there, depending on local rules and applicable tax treaties.

It’s important to check with your resident country and country of citizenship (and anywhere else you may be liable) to fully understand the taxability of your specific situation.

ZZP’ers and tax residence: Why being a Dutch tax resident matters

For ZZP’ers living in the Netherlands, being a tax resident provides access to benefits such as healthcare allowances, childcare subsidies and the state pension system (AOW). 

These benefits are based on your tax residency in the Netherlands and not on paying double taxes. For expat ZZP’ers with an annual income below €36,000, being a tax resident in the Netherlands can offer significant financial advantages, such as access to healthcare and childcare allowances, which can offset some of your tax obligations.

While this approach requires careful consideration of your financial situation, for many expat freelancers, the added benefits make opting into double taxation a practical and rewarding choice.

How does the Netherlands address double taxation?

The Netherlands has several mechanisms to prevent double taxation. A few of these options include:

1. Tax treaties: The Netherlands has signed tax treaties with over 95 countries to avoid double taxation. These treaties determine:

• Which country has the primary right to tax your income.
• The applicable tax rates.
• Rules for claiming tax relief.

For example, the Netherlands’ tax treaty with Germany ensures that income earned in Germany is either exempt from Dutch taxation or credited against Dutch tax liabilities.

1. Tax credits: If you’ve already paid tax on income earned abroad, the Dutch Tax Authority allows you to claim a tax credit for the amount paid, reducing your Dutch tax liability.
   
   
2. Exemption methods: In some cases, the Netherlands exempts foreign income from Dutch taxation altogether, though this depends on the specific tax treaty.

Steps to navigate double taxation

Before you start filing like crazy, there’s a few simple steps you can follow to properly navigate the often intricate world of double taxation. If you’re in need of some peace-of-mind, Xolo is here to help every step of the way.

1. Start by determining your tax residency(s): Determine your tax residency by evaluating where your primary residence, family life, or main economic activities are based.

2. Next check your applicable tax treaties: Research the tax treaties between the Netherlands and the countries where your clients are based.

3. Then track any foreign income and taxes paid: Keep accurate records of income earned in each country and taxes paid to foreign governments.

4. Now you can claim tax relief: File for tax credits or exemptions when submitting your annual tax return to the Dutch Tax Authority.

*Wink, wink!* Xolo is here to help!

Double taxation is a common concern for expat freelancers, but it doesn’t have to be overwhelming. Whether you’re seeking tax relief through treaties, exemptions, or opting into residency-based rules, understanding your options is key to maximizing your financial opportunities.

When in doubt, consult a tax expert or partner with Xolo to make the most of your income while staying compliant with Dutch regulations.