How do taxes work? If I, as a US citizen, move from the US to Netherlands and maintain my remote US employment, will I have to pay 50% income tax?
If you're American, you can get a DAFT self-employment visa for about 2k EUR total (app fee plus various other professional services to set it up). But then you absolutely will be filing NL taxes and paying NL taxes. They are indeed very high compared to US. You will also still be filing US taxes, although you won't owe the US since you will have already paid more in NL.
I do not recommend NL for digital nomad who plan to stay longer than a "brief" visit of a month or two. If you're only staying a month or two, you're not a resident and won't have to bother with NL taxes.
Also, winter is dark and sucky, and summer is heaven except for the new brief periods of VERY HOT days. Keep in mind that most places do not have air conditioning.
And healthcare costs that round to zero, and neither you nor your children will be shot.
Let’s also discuss the fact that if you live near any city, having a car is purely optional, and for less than €10 a month, you can get 40-50% off of public transportation costs through their subscriptions.
So sure, you may pay an extra 10k a year in taxes, but no car payment, insurance, or healthcare costs probably makes up that 10k very quickly, if not in cash, then in peace-of-mind.
In short, you don't have to worry about healthcare expenses as long as you are employed by a decent tech company.
I grew up and lived in the US for most of my life. The healthcare simply isn’t imaginable for most Americans. I don’t have to argue with insurance about whether or not a medication is covered, I don’t have to add an extra two hours to my hospital visit just to work out billing, getting an epi-pen doesn’t bankrupt me, and so much less hassle. I got into a motorcycle accident in the US. After really good insurance, it still cost me nearly 100k, my son cost 20k + a huge argument with insurance about the date of conception so they could get out of paying for it. That would have all been free here without any argument whatsoever.
I understand your denial, I was once the same way.
But as the original question was just about paying taxes, I didn't provide pro/con reasons for living in NL. I chose to live in NL, and I love having good public transport. However, 40-50% discount is not a normal thing. Even so, if you can avoid owning a car, it's cheaper to use public transport. But if like me you live in a village, you still need a car. And car ownership is much more expensive in NL than US. Of course fuel is much more expensive too, but most of us drive very fuel efficent cars here.
All together, the best reasons for living in NL vs US are safety, availability of public transport, and relatively lower income inequality. You give up a lot of $$ for those benefits, but I think it's worth it.
Now, when the moron entitlist farmers protest because they want to be allowed to maximize profit at the cost of regional and global pollution, and the NL government bends over and takes it all, that irks me greatly. So not everything is perfect.
You do save money on dining out, though, because most restaurants have bland food with poor service; thus, it's better to eat at home or at a friend's.
It’s only a little higher than the US for taxes. But I was self-employed in the US, so I didn’t have an employer invisibly paying half my US taxes. If coming from a place of employment to the NL, a doubling of taxes would be normal?
For the car, it’s usually far cheaper to just rent a car for a few hours (SIXT ride share) or days vs owning one.
This essentially means that 30% of your income will not be taxed. This makes a huge difference! Unfortunately, it does not apply if you are self-employed. The 30% benefit also only lasts a few years. I believe the duration has been shortened in the last couple of years, and now has a maximum of 5 years. Stay longer, and you'll be paying proper Dutch level taxes.
As for the car, there are a few good hourly car sharing services. However, those aren't useful if you live in a village where no such cars are near.
salary - EU taxes + Social Welfare Benefits > salary - US taxes - US healthcare - US retirement
My employer routinely sends me to Frankfurt/Brussels/Paris. There are no local engineers doing what I am doing who have a higher standard of living than I do-- and I'm only middle of the road here in the US.
Of course, the reality is completely different for almost every other career field but no amount of free healthcare makes up for the fact that I earn, at a minimum, 2x the amount an aerospace engineer in Paris does.
Also, the safety of the US is highly variable. In my area the gravest and most obscene crime that has occurred in the last five years was some teens spray painting "420 every day" on the dumpster behind the elementary school.
This is true if nothing really bad happens to you and your family ( car accident, really bad decease, ... ). France will have much better social security for tail risk.
This equation is not deterministic. It works on majority of cases, but having the peace of mind of feeling safe, is worth a lot to me.
Tail risk also compounds the bigger your family is. I am very grateful that my parent will have lifetime free Healthcare, hassle-free retirement, even though this comes at a 50% income tax + social security.
The question wasn't about quality of life, it was about paying taxes. Thus, I only answered for that.
If you work for 91+ days then you don't maintain your US employment. You must find new employment in The Netherlands and get a work visa. That may mean staying at your current company and switching from the US based company to their NL based company, but it's still a new job. You'll pay taxes in the NL, but you may get a SIGNIFICANT discount for the first 5 years as an IT worker [0].
You will still need to pay taxes in the US, but you'll get a discount of any taxes already paid to the NL so, effectively, you won't need to actually pay any taxes since taxes are higher in the NL. You'll still file every year.
0: https://www.expatica.com/nl/finance/taxes/the-dutch-30-rulin...
If there are treaties, then best case is you end up with a tax burden that is equal to whichever is higher. Treaties will usually let you claim credits for foreign taxes paid. Navigating how to apply for the treaty benefits will be a huge PITA though...
In the worst case you may end up being double taxed on some aspects of your income. Sometimes treaties don't credit you for all types of taxes paid and tax-deferred/advantaged investment accounts (retirement or otherwise) may also not be fully recognized across jurisdictions, making them not actually tax-deferred/advantaged.
Would be a large YMMV situation, though the silver lining is that figuring out how to navigate this would largely be a one-time cost.
While you may have 50% income tax in Netherlands. The cost of living may balance that out. For example by not needing a car, ever.
The cost of living definitely balances things out. I just wish The Netherlands would change their stance on dual citizenship.
The alternative is to do a work visa and then resident visa until we're 65 and then we can "opt" for citizenship which does allow for dual citizenship. It's a much longer route though.
UK is just easier for multiple reasons but comes with it's own bag of worms.
The fee is €55 (not a typo).
Ah yes no cars were ever seen on Dutch street.
> The cost of living may balance that out
They don't. Compare local purchasing power of any big European city with any American city. 9 out of 10 times, people in American cities would have higher purchasing power.
Even Alabama and Mississippi have higher tech average wages than countries like Germany and Netherlands. If you move out of central/western Europe, things only get worse.
https://www.visualcapitalist.com/us-states-top-tech-salaries...
Alabama ~$86,720/year
Mississippi ~$71,720/year
Germany ~46K Euros/year (googled)
Netherlands ~59K Euros/year (googled)
This doesn't even talk about how much higher taxes in these countries are. You will be paying almost ~40% (tax and social security) for these salaries in Germany and Netherlands.
Doubt, especially once you factor things like paid vacations, paid parental leave, healthcare, etc.
The big difference is when you are an healthy young techbro, after that it equalize quite rapidly on average. Of course there are outliers but for the average software developer I'd say you're much better of in a European capital than in Alabama
Lifestyles are also completely different and can't be priced in
Almost everyone I have heard from who moved to US confirmed their bank balance got fatter. This is also true about people moving to Switzerland. Even with high costs in Switzerland, you make extra money and pay less taxes.
You gain some and lose some, personally I would never go back to the US even if I got a 3x salary increase. Having lived in both the lifestyle difference is a deal breaker for me. And Im not talking about buttfuck nowhere USA, I'm talking about NYC, SF and Mountain View
Your doubt is misplaced. Have been working in the valley for 15-20 years now. Between my partner and myself, we have seen close to ~10 companies. At almost all of those except for a tiny startup, we saw: good health insurance (with out-of-pocket maximums to cap your spend), 3-5 weeks of paid vacations per hear, 3-4 months of paid parental leave (for both parents), etc.
I know that the bottom quintile of the American society doesn't have it great. But if you have a tech job offer from a decent Silicon valley company (not tiny bootstrapped startups), the only thing you have to worry about would be your visa. Another tricky area would be housing and I say tricky only because personal preferences vary a lot there and your options also differ based on your family situation - partner working? kids? schools? like cars? hate cars?
It's even worse in big European cities. Lack of housing is a big issue. This means you have to move outside of the city and boom your life is car dependent now. You can try throwing money at it but at the end paying 2K for rent when you earn 3K(after taxes) isn't something you would be happy about.
None of my friends own a car, we all live in big European cities.
We all pay less than ~25% of our income for housing.
Healthcare in US: LOL
But, no, I had a non-urgent MRI within a couple weeks and I paid €0.