FAQs - Income taxes abroad
I have been offered a one-year job in another EU country. Will I have to pay taxes on my salary there?
YES - Most likely. If you stay in a country for longer than 6 months in a year, that country would normally consider you as resident there for tax purposes. This would mean that that country will tax the income you earn while working there and will also be entitled to tax your worldwide income. You should find out whether you will be considered a tax-resident in your new country and what the applicable rates and tax deductions are. You should also check whether the salary you earn there will also be taxed in your home country and what relief, if any, is provided in the double tax agreement between these 2 countries.
I have been offered a job in Belgium and I will continue to live in France and commute every day. Where will I pay taxes?
As a cross-border commuter, you will normally pay taxes on your salary in Belgium, where you will probably see a provisional amount withheld from your salary by the Belgian tax authorities. However, as a tax-resident in France, it is in France that you will have to declare and pay tax on your worldwide revenue, including your Belgian salary. Normally, tax paid in Belgium will be taken into account when determining your tax due in France, in order to avoid double taxation.
Check the bilateral tax agreement between France and Belgium, to see whether "frontier worker" status applies to you. If it does, you might be taxed only in France. You should also see the latest Franco-Belgian protocol on cross-border commuters (or frontier workers).
You can also contact the local tax authorities in Belgium and France, or the European employment cross-border partnership in your region for clarification of the situation.
I am a cross-border commuter. Can I claim tax relief in my country of residence, where I am considered resident for tax purposes, on my contribution to an occupational pension scheme in my country of employment?
THAT DEPENDS. If you are earning income from employment in one country, that country will probably have to give you all tax reliefs in respect of income from employment available to residents of that country. This would include relief for contributions to occupational pension schemes if this is available to residents, regardless of where the occupational pension scheme is located.
If you benefit from tax relief for contributions to an occupational pension scheme in your country of employment, you would not benefit from such a deduction in your country of residence as well.
Equal treatment rules mean that your country of employment and country of residence must give you the same treatment as is available to residents/persons employed locally but are not required to give you better treatment.
I am a cross-border commuter and pay taxes in the country where I work. Am I entitled to tax reliefs there?
This depends on whether you have any other income from the country where you live, and on the tax rebate rules applied to residents in the country where you work.
To be certain, ask your tax office; a European employment adviser can also provide basic information on relevant rules.
Generally, most EU countries tax residents and non-residents differently.
As a cross-border commuter, you may not be entitled to tax reliefs available to local residents in the country where you work if you (or your spouse in some cases) earn some income elsewhere and are not, therefore, under the rules of that country, considered to have earned your "entire or nearly (your) entire income" there.
However, if you do earn all or nearly all your income in the country where you work, that country is obliged under EU law to give you the tax allowances that are available to its residents. This could mean giving you allowances for payments made in your country of residence. For example, if you are contributing to a supplementary pension scheme in the country where you live, your contributions should be deductible in the country where you work – as long as your country of work allow tax deductions for contributions made to such a scheme in that country.
Indeed, some countries even treat cross-border commuters as fictitious residents under certain conditions which vary from country to country. If you have that status, you can claim the same tax deductions or reductions as residents of the country where you work.
Look at applicable conditions carefully before starting cross-border commuting. Check also the relevant case law for similar situations.
If you have received tax deductions and allowances in the country where you work, you will most probably not receive them in the country where you live.
My current French employer is posting me to the Netherlands. Where will I be taxed?
You'll probably remain tax-resident and taxable on your worldwide income only in France as long as:
- the posting is for no longer than 6 months
- your salary is not paid by or on behalf of any employer resident in the Netherlands
- your salary is not paid by an office or other permanent business owned by your employer in the Netherlands.
However, if all of these 3 conditions are not met, you may also be taxable in the Netherlands– at least for the income earned during your posting.
If you stay more than 6 months in the Netherlands, you would probably be considered tax-resident and, therefore, taxable on your worldwide income, there. Under most tax agreements, a "tie-breaker" provision is operated to deem you resident in one country only if otherwise both countries would consider you resident. Under that provision, you could be deemed tax-resident in your home country even though working and living in another country, if you kept your permanent home in your home country and your personal and economic ties with that country were deemed to be stronger (for example if your spouse and children continued to reside in your home country and you returned home every weekend).
If France was deemed to be your place of residence, the Netherlands would not be entitled to tax your worldwide income but could tax your income from your employment in the Netherlands.
Whichever country is deemed to be your country of residence would normally credit the tax paid in the other country against tax due in your country of residence. Note that under most double taxation agreements, there are likely to be different rules if your employer is a public authority.
In all cases, for a definitive answer, see the relevant tax agreement between the countries involved (France and the Netherlands in your case), or contact the national tax authorities.
I live and work (self-employed) in country A and have "posted" myself to country B for the 1-year duration of a project there. Presumably I'll stay tax-resident in country A, if I remain covered by social security there?
NOT NECESSARILY. In fact you will probably become tax-resident in country B if you stay there for more than 6 months in a tax year.
Your status for tax purposes depends on the national laws of countries A and B, and any double-taxation agreement between them. However, the norm is to acquire tax residence in the country where you're working after 6 months there.
This year I was sent to work for 4 months in another EU country. Where should I pay income tax?
As the posting lasted less than 6 months, you have probably continued paying tax in your home country (the country where you normally work). As a general rule, you shouldn't have to pay any income tax in the host country unless:
- your employer has a permanent office in that other country, or
- you were seconded to work for an employer based in that other country.
Even if none of the above factors applied, the host country's laws might nevertheless have required you to pay tax on the salary you receive during your posting.
But if this happened, you should be able to claim a refund from the host country, under the terms of the double taxation agreement between your host country and home country.
Note that under most double taxation agreements, there are likely to be different rules if your employer is a public authority.
I've been posted abroad for a year and I am being asked to pay income tax in my host country. Am I eligible for any tax deductions/reductions there?
After living for a whole year in another EU country, you are normally considered resident there for tax purposes. This means that country should grant you the same tax deductions or reductions it applies to its own nationals – even if these apply to expenditure incurred outside its borders.
So if your host country allows tax deductions for childcare fees, for example, you should be able to deduct any childcare fees you paid in your home country.
I am a civil servant in the administration of one EU country and work in another EU country. Where should I pay income tax?
This will depend on the bilateral tax agreement between the country employing you (the "home" country) and the country where you work (the "host" country). Most EU countries have opted for the rule whereby, as a civil servant, you pay taxes only in the "home" country.
Exception: You may be required to pay taxes in the "host" country if you are required by your employer to work there and either:
- You are a national of the "host" country or
- You did not move there solely for the purpose of working as a civil servant.
This is only a summary of the most common rule. There could be exceptions in some international tax agreements. Ask your tax office or a European employment adviser and consult the relevant bilateral tax agreement.
I'm a civil servant currently working abroad. My home country pays and taxes my salary. Am I entitled to the same tax deductions as my colleagues who have not been seconded abroad like me?
YES - You should normally be entitled to the same tax deductions as residents of your "home" country - although there may be exceptions if your income is not the entire income of your household, for example if your spouse is also working and earning an income in the host country and if he/she has the right to claim similar deductions in the host country.
- if your "home" country allows a tax deduction for childcare fees, you must be able to deduct a corresponding amount for any childcare fees you pay in the "host" country.
- if your "home" country allows a tax deduction for interest on a mortgage, you must be able to claim a corresponding tax deduction for any interest you pay on a mortgage for a house you've bought in the "host" country.
You would not, in any event, be entitled to two sets of deductions.
If you feel discriminated against, you should seek redress from the national authorities. Depending on the nature of the problem, you could also seek assistance through the EU citizens' assistance services.
If I have my unemployment benefits transferred abroad and stay there for 3 months, will I have to pay income tax there?
Perhaps not - Depending on the double taxation treaty between your country of normal residence and the country to which you are moving, you may continue to be required to pay tax only in the country which is paying the unemployment benefit. For detailed guidance on international tax issues, seek advice from your tax office and consult the bilateral tax treaty concluded between the two countries.
I am retired and I live in another EU country for 5 months a year. Do I need to pay income tax there?
There is no EU-wide law on tax issues relating to cross-border pensions. There are only domestic tax laws and tax agreements. In most cases, you have to pay income tax only in the country where you have your primary residence. Some countries might consider you tax-resident, and therefore taxable, if you spend a period of 5 months there every year – but under the tax agreement between your home and host country you may, on balance, be treated as a resident only of your home country.
Whether resident or not in your host country, if you receive a public-sector pension (if you worked as a civil servant), you will normally have to pay tax on the pension only to the country that pays the pension.
This is only a summary of the most common rule. There could be exceptions to this rule in some international tax conventions. Ask the local tax office(s).
Can the country from which I receive dividends charge a higher rate of tax on them just because I live in another country?
NO - The EU's equal treatment principle applies to tax on dividends, interest and other securities income. The country from which the dividends are paid cannot apply a higher tax rate just because the dividends are going abroad – unless your country of residence will give you tax relief for the higher tax so that you are not discriminated against.