The State Secretary of Finance has approved by decree that the exemption method applies to certain employment income under the tax treaties with the Gulf States.
Dutch tax residents working in the Gulf States (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates) pay no or minimal tax on the wages allocated to the Gulf States under the tax treaty. Because the tax treaties include the credit method for certain employment income, this means that income tax is levied at Dutch income tax rates. A reduction is not applicable because the Gulf States' income tax must be credited. If this income tax is zero, it does not actually reduce Dutch income tax. However, almost all other tax treaties concluded by the Netherlands include the exemption method for employment income. In that case, the Netherlands grants an exemption from Dutch income tax, regardless of whether and how much income tax is paid in the country of employment. This decree means that the more favorable exemption method also applies to income from certain employment income earned in the Gulf States.
Feel free to contact me for more information or a proper filling of your income tax return by email: danielle.peeters@tax4expats.nl
