Do you live in the Netherlands and derive income from Germany? Or do you live in Germany and derive income from the Netherlands? The tax treaty concluded between the Netherlands and Germany provides the rules and agreements on the taxes you will have to pay in your situation. The agreements made in the tax treaty have binding force and always prevail over Dutch or German national legislation.
You may have to file a tax return in Germany and in the Netherlands.
Not only does the treaty ensure that you do not have to pay taxes twice, it also prevents a situation where you pay taxes in neither country. So your income is taxed in either Germany or the Netherlands. The core rule is that you pay tax on your wages in the country where you work (your country of employment). The exceptions to this rule are presented in the below.
If you reside in the Netherlands, pay taxes on your wages in the Netherlands, and will temporarily work in Germany for your Dutch employer, you will continue paying taxes in the Netherlands.
You do have to meet the following conditions:
Should you stay in Germany for more than 183 days, or should the German permanent facility pay your wage costs, you must pay taxes on your wages in Germany. If you pay taxes on your wages in Germany, you may be entitled to financial compensation. More information is available under Compensation scheme when you pay taxes in Germany.
This scheme also applies the other way round, if you reside in Germany, pay taxes on your wages in Germany, and come to temporarily work in the Netherlands for your German employer. In that case, you will continue to pay taxes in Germany.
If you work for the government, you pay tax on the income you earn from that work in the country where the government is based. It doesn't matter which country you live in.
Do you reside in the Netherlands and start teaching or conducting academic research in Germany while being paid from the Netherlands (for example, by a Dutch educational institution)? Or do you reside in Germany and start teaching or conducting academic research in the Netherlands while being paid from Germany (for example, by a German educational institution)? In this case, you pay taxes in your country of residence for a period not exceeding 2 years from the day you start work.
You do have to meet all the following conditions:
This scheme applies to educational institutions of the government and to all private educational institutions officially recognised by the Netherlands, at any level (primary schools, secondary schools, and tertiary education). Ask your educational institution whether it is officially recognised by the Netherlands.
Should you be paid in the country of employment, the rules listed under 'You temporarily work in salaried employment' or, should you work for a government institution, under 'You work for the government', apply.
If you work in salaried employment for a company established on a business park located on the Dutch-German border, you pay taxes on your wages in the country of your mandatory social insurance scheme. If you are covered by the Dutch social insurance scheme, you pay taxes in the Netherlands. If you are covered by the German social insurance scheme, you pay taxes in Germany.
Verify your country of social insurance on grensinfopunt.nl.
If you reside in the Netherlands and work in Germany for an employer established outside of Germany, or if you reside in Germany and work in the Netherlands for an employer established outside of the Netherlands, you pay taxes on your wages in your country of employment. However, should you, in a period of 12 months, stay in the country of employment for no more than 183 days, you pay taxes in your country of residence, unless you have been placed in, or assigned or seconded to, your country of employment or unless you work for a permanent facility in your country of employment.
If you reside in Germany and receive a pension, annuity, or social security benefits from the Netherlands due to having worked there or vice versa, you will generally pay taxes in your country of residence.
Pensions or annuities are also deemed to originate from the country of employment if you accrued rights to them in your country of employment and then transferred them to an insurer in your country of residence.
If the total amount of your pensions, annuities or benefits exceeds €15,000 annually, you will pay tax in the country from which the income originates.
When calculating the €15,000 limit, the following do not count:
Your nationality determines the country where you pay taxes on your state pension. Should you hold the nationality of your country of residence, you pay taxes on the state pension from your previous country of employment in your country of residence. Should you hold the nationality of another country, you pay taxes on the state pension in your previous country of employment.
If you have a social security benefit from the Netherlands, you will pay tax in the Netherlands. If you have a social security benefit from Germany, you will pay tax in Germany.
From 1 January 2023, social security benefits will no longer count when calculating the €15,000 limit. If you have a state pension insurance scheme (AOW) or surviving dependents' pension insurance scheme (Anw), these do count when calculating the €15,000 limit.
You pay taxes on the lump-sum pension, annuity, or social insurance scheme payment from the Netherlands in your country of employment.
If you reside in Germany and receive a pension or annuity from the Netherlands, you will temporarily pay reduced taxes should you meet these conditions. This scheme applies for a period of 6 years. Your benefits agency does not take account of this scheme. The excess amount in taxes withheld by it will therefore be returned to you after you file your tax return.
You do have to meet all the following conditions:
The following table provide the maximum tax rate payable by you.
| Year | Your maximum payment |
|---|---|
| 2016 | 10% |
| 2017 | 10% |
| 2018 | 15% |
| 2019 | 20% |
| 2020 | 25% |
| 2021 | 30% |
The amount of taxes you pay differs per country. Because you can deduct certain items (mortgage loan interest for your own house, personal allowance) from your taxes in the Netherlands, the amount of income tax and national insurance contributions payable in the Netherlands may be lower than that payable in Germany.
A compensation scheme was therefore agreed upon between the Netherlands and Germany. Should you work in salaried employment, you can compensate for this difference by applying for the compensation scheme in your tax return. The amount of compensation paid is shown on your final tax assessment. If you are an entrepreneur or pensioner, you can apply for the transfer facility in your tax return.
The amount of compensation awarded is equal to the difference between:
You may also choose to have the transfer facility apply. In this case, the items you cannot, at this time, deduct from your Dutch tax return will be saved for a later time.
Should you receive German wages, you must first convert them to Dutch wages before filing your return. Use the Tool for converting Belgian or German wages to Dutch wages (Dutch only) to do so. You must enter the Dutch wages calculated using this tool in your tax return.