Tax treaties

USA - the Netherlands

Tax treaty with the US


This page was published in 2002


1. Netherlands investment yield tax - allowable for FTC


Internal Revenue Bulletin. Bulletin No. 2002-15 April 15, 2002

 

HIGHLIGHTS OF THIS ISSUE


These synopses are intended only as aids to the reader in identifying the subject matter covered. They may not be relied upon as authoritative interpretations.

 

TAX CONVENTIONS


Rev. Rul. 2002-16, page 740.


This ruling confirms that the Netherlands investment yield tax is a tax for which a credit may be allowed under Article 25(4) of the U.S.-Netherlands income tax convention because, under Article 2(2), it is substantially similar to a prior Dutch tax that was a covered tax under the convention.

Rev. Rul. 2002-16, 2002-15 I.R.B. 740
Internal Revenue Service (I.R.S.)
Revenue Ruling


UNITED STATES -- KINGDOM OF THE NETHERLANDS INCOME TAX CONVENTION


Published: April 15, 2002

 

2. US-NL Tax Treaty


a. US-NL Income Tax Treaty

b. Technical Explanation of US-NL Income Tax Treaty

c. Protocol to the US-NL Income Tax Treaty, signed 8 March 2004

d. Senator Lugar applauds protocol

 

3. An additional U.S. credit allowed for part of the tax imposed by certain treaty partners on U.S. source income of U.S. citizens residing in the treaty country. (U.S.-NL treaty provides for this.)

 

International Taxpayer - Special Issues

 

International Taxpayer International Taxpayer - Special Issues Making or Changing Your Choice You can make or change your choice to claim a deduction or credit ...

"Certain treaties have special rules you must consider when figuring your foreign tax credit if you are a U.S. citizen residing in the treaty country. These rules generally allow an additional credit for part of the tax imposed by the treaty partner on U.S. source income. It is separate from, and in addition to, your foreign tax credit for foreign taxes paid or accrued on foreign source income. The treaties that provide for this additional credit include those with Australia, Austria, Canada, Finland, France, Germany, Ireland, Israel, Mexico, the Netherlands, New Zealand, Portugal, South Africa, Sweden, and Switzerland. The worksheet for this additional credit is found in the back of IRS Publication, 514 Foreign Tax Credit for Individuals."

 

4. IRS Pub. 514 - FTC

 

IRS Publication, 514 Foreign Tax Credit for Individuals

 

5. General info / advice regarding tax treaties

 

International Taxpayer - Researching Tax Treaties

 

6. Information from the US embassy in Germany (IRS office in Europe)

 

Frequently Asked Tax Questions

  1. Is there an office located in Germany, which provides assistance on American tax obligations?

  2. What countries fall under the jurisdiction of the IRS office in Berlin, Germany?

  3. Where should I file my tax return?

  4. What was the average exchange rate for the Euro to the Dollar to be used when filing the 2003 tax return?

  5. When is my tax return required to be filed?

  6. Can I pay my taxes in other than American dollars?

  7. I am a U.S. citizen living overseas with no U.S. income but substantial foreign income. Must I file a U.S. tax return?

  8. I am a U.S. citizen but had little income. Must I file a return?

  9. I was transferred overseas by my employer and am filing a tax return for the first time from an overseas location. What is my tax situation?

  10. I am a U.S. citizen who has lived abroad for several years and didn't know I had to file a U.S. tax return. What do I do now?

  11. I am a U.S. citizen living overseas with U.S. investments. Do I need to do anything special about them?

  12. I am a German citizen who recently sold U.S. real estate and a 10% amount was withheld in the U.S. from the selling price. What do I need to do now?

  13. I am a German citizen who will be sent by my German company to work in the United States. What are my U.S. tax obligations?

  14. I am a German citizen who has investments in U.S. stocks and mutual funds. A U.S. tax of 15% was withhold from my dividend payments. Do I have to file a U.S. tax return and will the 15% be refunded?

  15. I am a German citizen who has interest income from the U.S. Am I supposed to file a U.S. tax return and report this interest income?

  16. I am not an American and live outside the U.S., but I have U.S. investment income. Do I need a Social Security number?

  17. I am a non-resident alien but own U.S. rental income. What is my U.S. tax situation?

  18. I purchased goods in the United States. Can I get the sales tax refunded?

Answers

 

1. Is there an office located in Germany, which provides assistance on American tax obligations?


Yes. There is an Internal Revenue Service office at the U.S. Embassy in Berlin. The mailing address is:

 

Internal Revenue Service
American Embassy
Clayallee 170
14195 Berlin
Germany

 

2. What countries fall under the jurisdiction of the IRS office in Berlin, Germany?


The IRS office at the U.S. Embassy in Berlin, Germany is responsible for the following countries: Germany, Austria, Hungary, The Netherlands, Italy, Romania, Poland, Czech Republic, Slovak Republic, Estonia, Latvia, Lithuania, Former Soviet Republics (Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan), Lebanon, Iraq, Qatar, Syria, Iran, and Yemen.

 

3. Where should I file my tax return?


All U.S. taxpayers residing outside the United States should mail their tax returns to:

Internal Revenue Service Center
Philadelphia, PA 19255-1215 
USA

 

4. What is the average exchange rate for the Euro to the Dollar to be use in filing the 2003 tax return?


EUR 0.8882 = $1.00
For Example, if you earned EUR 25,000, this amount would be divided by 0.8882 to give you the converted dollar amount of $28,146.81.

 

5. When is my 2003 tax return required to be filed?


- U.S. citizens and resident aliens - April 15, 2004
- U.S. citizens residing outside the United States on April 15th - June 15, 2004

 

Write across the top of the front page of the return "residing outside the United States"


- Non-resident alien with U.S. wage income - April 15, 2004
- Non-resident alien with no U.S. wage income - June 15, 2004

 

Extensions of time to file can be requested by filing the proper extension request form.
Please remember: Extensions of time to file are not extensions of time to pay. IRS must receive payment of tax due by 15 April 2004.

 

6. Can I pay my taxes in other than American dollars?


No. Tax payments must be made in U.S. currency, using a check or money order. German banks will issue bank checks in U.S. dollar denominations.

 

7. I am a U.S. citizen living overseas with no U.S. income but substantial foreign income. Must I file a U.S. tax return?


Yes. U.S. citizens must report their worldwide income on their U.S. tax returns. If you paid income taxes to a foreign country, you may qualify for a foreign tax credit. IRS Publication 514 “Foreign Tax Credit for Individuals” explains how to calculate this credit. You may also qualify for a foreign earned income exclusion of up to $80,000 for 2003. Qualification requirements and forms to be completed are explained in IRS Publication 54 “Tax Guide for U.S. Citizens and Resident Aliens Abroad”.

 

8. I am a U.S. citizen but had little income, must I file a return?


That depends on the level of your income. Please see the amounts listed below to determine if you have a filing requirement or you may call IRS for assistance in determining if you are required to file.

 

Filing Status


Single under 65 $ 7,800
Single 65 or older $ 8,950 
Head of household under 65 $10,050
Head of household 65 or older $11,200 
Qualifying widow(er) under 65 $12,550 
Qualifying widow(er) 65 or older $13,500 
Married filing jointly both spouses under 65 $15,600
Married filing jointly one spouse 65 or older $16,550
Married filing jointly both spouses 65 or older $17,500 
Married filing separately (any age) $ 3,050


9. I was transferred overseas by my employer and am filing a tax return for the first time from an overseas location. What is my tax obligation?


Obtain and read Publication 54, "Tax Guide for U.S. Citizens and Resident Aliens Abroad". This publication explains your filing requirements. Forms and Publications are available on the IRS website www.irs.gov or from the IRS office in Berlin. Some forms and publications are also available at U.S. embassies and consulates.

 

10. I am a U.S. citizen who has lived abroad for several years and didn't know I had to file a U.S. tax return? What do I do now?


As a U.S. citizen or resident alien (valid green card holder), you are required to file a return for any year that your income exceeded the minimum income levels. If you had a filing requirement, your earned income is foreign sourced, and you choose the exclusion, you should begin by filing the current year’s tax return and the preceding two years. You can choose the exclusion on a return provided you owe no federal income tax after taking into account the exclusion. If you owe federal income tax after taking into account the exclusion, you can choose the exclusion on a return filed after the periods described above provided you file before IRS discovers that you failed to choose the exclusion. You must type or legibly print at the top of the first page of the Form 1040 "Filed pursuant to section 1.911-7(a)(2)(i)(D)."

 

If you owe federal income tax after taking into account the foreign earned income exclusion and the IRS discovered that you failed to choose the exclusion, you must request a private letter ruling under Revenue Procedure 92-85 (as modified by Revenue Procedure 93-28).

If a tax liability is incurred for one of those years, then you should generally file returns for an additional two prior years (for a total of 5 tax years). Please review the website: www.irs.gov “Central 1040” to download prior year forms.

 

11. I am a U.S. citizen living overseas with U.S. investments. Do I need to do anything special about them?


Yes, since your investment institution may not know that you are a U.S. citizen living overseas, you must notify them of this fact, using Form W-9 “Request for Taxpayer Identification Number and Certification”. Otherwise, the investment institution may think you are a non-U.S. citizen and withhold taxes from your investment income.

 

12. I am a German citizen who recently sold U.S. real estate and a 10% amount was withheld in the U.S. from the selling price. What do I need to do now?


You must file Form 1040NR “U.S. Nonresident Alien Income Tax Return” with Schedule D for the year of the sale and attach Form 8288-A which documents the 10% tax withheld. If the sale involved a rental or business property, Form 4797 must also be completed. You must have a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) in order to file the 1040NR. If you do not have an ITIN, you must fill out the Form W-7, attach your certified documentation and income tax return to it and mail everything to the ITIN Unit address given in the Form W-7 instructions.

 

13. I am a German citizen who will be sent by my German company to work in the United States. What are my U.S. tax obligations?


IRS publication 519, "U.S. Tax Guide for Aliens", explains your situation. Contact IRS if you have further questions.

 

14. I am a German citizen who has investments in U.S. stocks and mutual funds. A U.S. tax of 15% was withhold from my dividend payments. Do I have to file a U.S. tax return and will the 15% be refunded?


No to both questions. U.S. dividend income paid to German citizens is subject to a 15% withholding tax. If that amount has been withheld, you do not have to file a U.S. return as the correct tax liability has been paid. By the same reasoning, no refund is due.

 

15. I am a German citizen who has interest income from the U.S. Am I supposed to file a U.S. tax return and report this interest income?


No. Interest income from the following sources paid to non-resident aliens is tax exempt from U.S. taxation. You do not need to file a U.S. tax return or pay U.S. income taxes on bank deposits, checking and savings accounts, certificates of deposit deposits at credit unions and savings association.

 

16. I am not an American and live outside the U.S., but I have U.S. investment income. Do I need a Social Security number?


No, not at present, but you must send Form W-8BEN “Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding” to the financial institution which holds your investment to notify them of your residency and citizenship so that they will withhold the correct U.S. income tax. If an Individual Taxpayer Identification Number (ITIN) is required and you do not have one, you must fill out the Form W-7 in order to receive one.

 

17. I am a non-resident alien but have U.S. rental income. What is my U.S. tax situation?


You have two choices. You can have your U.S. rental income subject to a 30% withholding tax and you have no further requirement to file a U.S. tax return or pay additional U.S. taxes. 
You may, however, choose to consider your rental income as an effectively connected U.S. business activity. That requires you to file a U.S. tax return and itemize your rental income and expenses. See Publication 519, “Tax Guide for Aliens”, for information. Remember, filing a U.S. return requires an Individual Tax Identification Number (ITIN - Form W-7).

 

18. I purchased goods in the United States. Can I get the sales tax refunded?


There is no national sales tax system, such as Value Added Tax - VAT (Mehrwertsteuer) in the United States. Sales taxes are assessed by the individual states and cities, and as such each has complete autonomy in administering its taxes. Most states have no provision for sales tax refunds. There is no office in the U.S. Embassy which can provide any assistance in this matter.

 

We have been advised that Louisiana is the only state which provides a refund of sales tax for international visitors on goods purchased at participating stores. You may contact the State of Louisiana at:

 

Louisiana Tax Free shopping
P.O. Box 20125
New Orleans, LA 70141

Tel: 001 - (504) 467-0723
Fax: 001 - (504) 568-6670 

SHARE THIS PAGE