Enjoy tax-free wages? Go to one of the Gulf States!
Paying no tax on your salary income seems too good to be true, but it is definitely possible! Jan the Taxman will find out for you how you can do it.
It takes some doing....
First, you have to find a job in one of the Gulf States. These are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. It is also helpful if you like a bit of sunshine, because otherwise it will be hard to keep up. Bring your golf club, too, because they are the "Gulf States" for a reason.
Anyway, what exactly is the deal with that tax-free salary?
In a 2017 decision, the Secretary of State for Finance approved the application of the so-called "exemption method" to wage income from the Gulf States. This method means that wages attributable to work in the Gulf states are exempt from Dutch income tax.
Why tax-free wages possible?
Then you might think that the Gulf states themselves tax wages, but that is not the case. These states do not tax wages. This was also the reason for the secretary of state to publish the 2017 decision. According to him, this non-taxation in the Gulf states meant that Dutch workers could not properly compete with Gulf state workers, because the Dutch workers were also liable for income tax in the Netherlands. This was the case because they could offset their Gulf state tax, which was zero, against Dutch income tax, which resulted in having to pay the full whack in the Netherlands. After all, there was nothing to offset.
Therefore, the State Secretary intervened and the situation is now as follows. The Gulf states do not levy tax on wages and the Netherlands exempts wage income attributable to work in the 'sandbox'.
What are you waiting for!
It seems too good to be true, but it is not: enjoying tax-free wages is possible. If you like this, you will have to find a job in one of the oil states mentioned above. Jan de Belastingman has one tip: ignore the vacancies for stadium construction in Qatar.