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Bustling hotel lobby in the heart of Amsterdam
[Leans forward with a notepad in hand] Good morning, Secret Adviser. Let’s dive into the intricacies of tax residency. How does one become taxable in the Netherlands?
[Sips coffee] Good morning, Tax Natives. Well, in the Netherlands, you become taxable either by being a Dutch resident or a non-resident taxpayer. It primarily depends on your main residence and other factual circumstances—like where your family lives or where your main economic interests lie.
[Frustratingly shakes their pen] I see. So, what determines a Dutch resident taxpayer exactly?
[Leans back, relaxing] For a Dutch resident taxpayer, it’s about having your main residence here in the Netherlands. This includes where your permanent home is maintained, where you work, where your family resides, where you’re registered with local authorities, and where your main bank accounts and assets are.
Now, what about non-resident taxpayers? How are they handled?
Non-resident taxpayers are those who have their main residence outside the Netherlands but earn income from Dutch sources. There’s also something called a ‘qualifying non-resident taxpayer’ status for those in the EU, EEA, Switzerland, or the BES islands, earning at least 90% of their worldwide income here. They get similar tax deductions and credits as resident taxpayers.
[A tourist interrupts, holding a map upside down, looking puzzled]
Excuse me, could you tell me how to get to the Van Gogh Museum?
[Points in the right direction with a smile] Just keep heading straight down this road, you can’t miss it!
[Laughs] Always busy around here! Let’s talk about the 30% ruling. How does that affect tax status?
[Nods] Yes, it’s a major shift. The 30% ruling allows some taxpayers to receive 30% of their income tax-free, and they can choose to be treated as partial non-residents. Meaning, they’re considered residents for personal income like salary but non-residents for income from investments.
[A waiter comes by, accidentally spills a small amount of water]
Oh dear, I’m terribly sorry!
No problem at all. [To Tax Natives] As I was saying, the classification affects how different types of income are taxed under various ‘boxes’ of income categories.
Speaking of which, could you elaborate on these ‘boxes’ of income?
Certainly. There are three boxes. Box 1 includes income from employment and home ownership, taxed up to 49.50%. Box 2 deals with income from substantial interest, like owning 5% or more in a company, taxed at 26.9%. Lastly, Box 3 covers income from savings and investments, which is sort of a net wealth tax.
Fascinating! And what about capital gains?
Capital gains are usually taxed either as business income in Box 1 or as substantial interest in Box 2, depending on the asset involved. The Dutch system doesn’t typically tax capital gains separately, except under certain conditions.
[Writes down notes…or makes a doodle] That’s quite comprehensive. Thanks for breaking it down, Secret Adviser.
[Laughs] Happy to share. Enjoy the rest of your day, and watch out for more spilled water!
[Grinning] Will do. Thanks for your insights!
[Both stand up, shake hands, and Secret Adviser heads towards the conference area of the hotel]
If you have any queries about private client tax in the Netherlands, or tax matters in Holland more generally, then please get in touch
The scene is set in a bustling hotel lobby in Mumbai. The crowd is excited as it is just hours before Mumbai Indians crucial game in the Indian Premier League (“IPL”).
The interviewer, Our Chief Tax Native, and the interviewee, Secret Adviser in India, are seated on a comfortable sofa, sipping coffee.
There’s a background hum of activity—guests checking in, a receptionist arguing with a new guest, and a cleaner fussing over something nearby. Secret Adviser seems relaxed, while Tax Natives appears focused on their questions.
[Leaning forward with a notepad in hand]
Good morning, Secret Adviser. Let’s talk about taxes in India. What are the basic principles of taxation there?
[Sips coffee]
Good morning, Tax Natives. In India, the Income-tax Act, 1961, governs personal taxation. Generally, Indian residents are taxed on their worldwide income, while non-residents are taxed only on income that originates in India.
[Frustratingly shakes their pen] I see. So, how is a person’s residential status determined for tax purposes?
[Leans back, relaxing]
It depends on their physical presence in India. You’re considered a resident if you’re in India for at least 182 days during a financial year, or 60 days during a financial year and 365 days in the previous four years.
But there are exceptions, especially for those who leave India for work or visit India from abroad.
Now, what’s this about the new income tax regime in India? I heard it’s quite different from the old one.
[Nods] Yes, it’s a major shift. The new regime offers lower tax rates if you give up certain tax deductions and exemptions.
From April 2023, it’s the default regime, but taxpayers can choose the older one if they prefer.
It’s aimed at simplifying the tax structure and is particularly beneficial for high-net-worth individuals due to lower surcharge rates.
[Meanwhile, the receptionist is in a heated argument with a new guest about a booking mix-up.]
Busy morning here! Let’s talk about the recent changes in tax rates. I heard there’s a reduction in the surcharge for the super-rich?
Yes, from April 2023, the surcharge rate was reduced from 37% to 25% for those earning over 50 million rupees.
This has lowered the effective tax rate from 42.74% to 39%, which is significant for high-income individuals.
[Writes down notes…or makes a doodle]
That’s quite a relief for them. What about capital gains? Any new changes there?
[Nods]
There’s a cap on the exemption for long-term capital gains from the sale of residential property. If the gains exceed 100 million rupees, they are now taxable. This cap was introduced from April 2023 to prevent excessive tax breaks.
[The tourist returns, holding a map upside down, clearly still lost. Tax Natives and Secret Adviser point him in the right direction, and he leaves with a smile.]
[Smiling] He’ll get there eventually. Now, what about gift and succession taxes? Are those coming back?
[Shakes her head]
Not quite. India doesn’t have succession or inheritance tax, and gift tax was abolished in 1998.
However, there’s a deemed gift tax in the income tax regime. It applies to money or property received without consideration or at an undervalue.
Recent amendments made it clear that gifts received by non-residents or RNOR from Indian residents are taxable in India.
[The receptionist’s argument with the guest reaches a resolution, and there’s a round of applause from the lobby staff.]
[Grinning] Looks like things are calming down. One last question: how does India deal with cross-border structuring and regulatory issues for HNIs?
[Leans in] India has an extensive network of tax treaties with various jurisdictions. There’s also the Black Money Act, which addresses undisclosed foreign income and assets.
It’s been a big tool in tackling tax evasion, granting authorities wide-ranging powers to investigate.
In terms of entrepreneurs and private trusts, the abolition of the dividend distribution tax in 2020 changed things, and the ‘angel tax’ now applies to share premiums exceeding fair market value, even for non-residents.
[Nods] Thanks for the detailed explanation, Secret Adviser. Enjoy your coffee, and watch out for that tourist!
[Laughs] Thanks, Tax Natives. I’ll keep my eyes peeled!
If you have any queries about this article on private client tax in India, or Indian tax matters more generally, then please get in touch.
[Standing up, and shaking hands] Pleased to be of assistance.
If you have any queries about private client taxation in Cyprus, or tax matters in Cyprus more generally, then please get in touch.
The meeting takes place in the welcoming lobby of an undisclosed hotel just off of O’Connell St in Dublin, Ireland.
Secret Private Client Adviser in Ireland, your mission, should you choose to accept it, is to educate us on the practical tax considerations in Ireland.
This task requires a delicate balance of expertise and discretion.
Be warned, should your real identity be revealed during this covert operation, you will be disavowed by Tax Natives and shunned by your fellow private client advisers.
Do you accept?
I accept.
[settles into a cozy armchair in the hotel lobby] Let’s delve into the tax considerations for private clients in Ireland.
Can you explain how an individual becomes taxable?
[leans forward, tapping a pen thoughtfully] Sure. In Ireland, tax liability hinges on domicile, residence, and ordinary residence.
For instance, if you’re in Ireland for 183 days or more in a tax year, you’re considered a resident.
[arguing with a guest] “No, Mr Bono, we didn’t want your free album drop on Apple… and we don’t want you to do a free concert in the lobby. People are trying to relax.
[suppresses a chuckle, then continues] Interesting. What about individual income taxes?
[sips coffee] Irish residents are taxed on worldwide income, with standard rates at 20% and higher rates up to 40%.
There’s also the universal social charge and pay-related social insurance.
Now, regarding capital gains…
[nods] Yes, how are they taxed?
[adjusts glasses] Capital gains tax is 33% on personal gains above €1,270.
But for non-domiciled residents, only gains remitted into Ireland are taxed.
[glancing at notes] And what about lifetime gifts?
Gifts may be subject to capital acquisitions tax with various tax-free thresholds.
For instance, you can receive €335,000 tax-free from a parent.
[to another guest] “No, we don’t offer tours to find the end of the rainbow!”
[smiles, then asks] What about taxes after death?
[leans back] Similar to gifts, inheritance comes under capital acquisitions tax, with the same tax-free thresholds.
[checking time] Lastly, any other taxes we should know about?
[stands up] Well, there’s local property tax, stamp duty, and VAT on various goods and services.
And no wealth tax in Ireland.
[extends hand] Thank you for these insights!
[shakes hand] Happy to help. Enjoy your stay in Ireland!
[They part ways, Tax Natives heading towards the bustling hotel exit, amused by the unique interactions of the day.]
If you have any queries about this top secret interview on private client tax in Ireland, or Irish tax matters in general, then please get in touch