Roll-over scheme (foreign pre-incorporation profit scheme)

The amount of the double tax relief cannot be more than the payable income tax in the relevant box. This could mean that certain deductible items, such as the mortgage interest connected with your owner-occupied home, will not result in a tax advantage. For these types of situations, there is the roll-over scheme. By means of a decision, we determine the amount of foreign income which is included in the calculation of the relief in a following year.

The roll-over scheme is applied to each box. Therefore, it is possible that you will receive a decision for income in box 1 and another decision for income in box 3.

Example of how the roll-over scheme works in box 1

Calculation of the double tax relief in box 1: Your income consists of € 27,226 income from earnings in Germany € 4,536 in negative income from being a homeowner. Your taxable income from work and home (box 1) then amounts to € 27,226  € 4,536 = € 22,690. You then have to pay € 944 in income tax.

For your income from earnings in Germany you owe tax in Germany and in the Netherlands to avoid double taxation you are entitled to a rebate. In this case the rebate to avoid double taxation would amount to € 27,226/€ 22,690 x € 944 = € 1,133. But since you only have to pay € 944 on your taxable income, the amount of the rebate will only be € 944, as this is the maximum amount of the rebate. 

In this example, the negative income from your owner-occupied home does not lead to a tax advantage. That is why this amount (€ 4,536) is reserved. Should you have income in box 1 in the future on which you have to pay income tax in the Netherlands, a double tax relief will still be given on the reserved amount and you will receive a tax refund. This is called the roll-over scheme or foreign pre-incorporation profit scheme. 

Overview of tax treaties

For an overview of the countries which the Netherlands has concluded a treaty with, please see Overview of treaty countries.

Please note!

The tax treaties do not include any rules on the levy of national insurance contributions. Other (international) rules apply to this. For further information, please see social security when working and doing business abroad.

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