fbpx

Next event in:

  • 00 DAYS
  • 00 HR
  • 00 MIN
  • 00 SEC
<>

US Taxes for Expats in the Netherlands: What to Know in 2026

Tags: ,

Categories: Finance

You’ve mastered the OV-chipkaart, learned to schedule a coffee with a friend weeks in advance, and maybe even developed a taste for raw herring. Life in the Netherlands is good. Then, someone mentions to you that even as an expat, you still have to file US taxes in the Netherlands.

Welcome to the less-fun part of being an American abroad. The good news is you can almost always avoid being taxed twice on the same income. The bad news? The paperwork is no joke, and a few common Dutch financial products can create headaches with the IRS if you aren’t prepared.

Here are the key things to know about US taxes for expats in the Netherlands for 2026.

A stack of dollar bills and an American flag

1. Yes, You Still Have to File a US Tax Return as an Expat in the Netherlands

The US taxes its citizens and lawful residents/green card holders based on worldwide income, not where you live. This means your relationship with the IRS doesn’t end just because you moved to the Netherlands. Most US expats must file a Form 1040 every year, even if they owe zero dollars.

2. You Get More Time to File, Not More Time to Pay

If you’re living abroad on the regular tax due date, the IRS gives you an automatic two-month extension to file and pay (usually to June 15). But interest still starts from the April deadline if you haven’t paid in full. Need more time? You can file Form 4868 for an extension to October 15th.

However, this is an extension to file, not to pay. If you owe any tax, interest starts adding up from the original April 15th due date.

3. Know Your Tax Years

In 2026, you will be filing your tax return for the 2025 tax year. For 2025, the Foreign Earned Income Exclusion (FEIE) is $130,000. For 2025, the FEIE is $130,000. For tax year 2026 (filed in 2027), it’s $132,900. Always clarify which year you’re talking about.

4. FEIE vs. Foreign Tax Credit: Your Big Decision or Maybe Not.

To avoid double taxation, most expats use one of two strategies:

  • Foreign Earned Income Exclusion (FEIE): Using Form 2555, you can exclude your foreign-earned income up to a certain limit, provided you meet residency requirements.

  • Foreign Tax Credit (FTC): Using Form 1116, you can claim a credit for every dollar of income taxes you’ve already paid to the Dutch government.

Note: If you pay a significant amount of Dutch income tax, the FTC is often a powerful tool. The FEIE is also great, but it may limit other aspects of your US tax return, such as IRA contributions and refundable child tax credits. It’s a choice worth pondering. Most US expats in the Netherlands end up paying very little tax to the United States because the Dutch tax rate is higher than the U.S. rate.

5. The Foreign Housing Exclusion Helps with Dutch Rent

If you qualify for the FEIE, you might also be able to exclude some of your housing costs. This is particularly helpful in pricey Dutch cities. For the 2025 tax year, the IRS designated Amsterdam and The Hague as high-cost areas. This can make a real difference if your rent feels like it’s climbing into the stratosphere. Please check with your US tax advisor if you meet the requirements to exclude these foreign housing costs.

6. FBAR: The $10,000 Reporting Rule

If the total combined balance of all your foreign financial accounts (including your regular Dutch checking and savings accounts) exceeded $10,000 at any point during the year, you must file a FinCEN Form 114, known as the FBAR.

7. FBAR Has a Separate, Simpler Deadline

The FBAR is technically due April 15th. The good news is that if you filed federal extension, you can get an extension until October 15th. You don’t need to file any special forms to get this extension.

Read Also: 10 Things You Will Miss About the USA When You Move to The Netherlands

8. Form 8938 (FATCA) is Different from FBAR

Form 8938 is another reporting requirement, but it has different rules. It’s part of your main tax return and applies if your foreign assets hit higher thresholds. For a single filer living abroad, the trigger is typically having over $200,000 in assets at year-end or over $300,000 at any time during the year. Many expats find they need to file both an FBAR and Form 8938.

9. Dutch Investments Can Be a Tax Trap (PFICs)

Be careful before you start investing in Dutch or European mutual funds and ETFs. Many are considered Passive Foreign Investment Companies (PFICs) by the IRS. This can lead to complicated reporting on Form 8621 and a surprisingly high tax bill. Always check if a non-US fund is a PFIC before you buy.

10. You Must Convert Euros to Dollars

Your income and expenses are in euros, but the IRS operates in dollars. You need to convert all your financial figures for your tax return. The IRS publishes yearly average exchange rates you can use for reporting.

11. Dutch Pensions Are Not 401(k)s

Your Dutch pension plan might seem straightforward here, but it can create complex reporting issues on your US tax return. These plans don’t get the same automatic tax-deferred treatment as a US-based 401(k) or IRA. If you are contributing to, rolling over, or taking money from a Dutch retirement product, it’s worth careful consideration.

12. FEIE Can Complicate IRA Contributions

If you use the FEIE to exclude your foreign income, it can affect your ability to contribute to a traditional or Roth IRA. Your “compensation” for IRA purposes is calculated differently when income is excluded. Don’t assume you can contribute to an IRA just because you’re earning a salary.

13. Owning a Dutch Company (BV) Means More Forms

If you’re an officer, director, or a significant shareholder in a Dutch private limited company (BV), you may need to file Form 5471. This form is notoriously complex, and the penalties for failing to file it are severe. This is crucial for founders, incorporated freelancers, or anyone holding shares in a friend’s startup.

13. Behind on Filing? There’s a Way to Catch Up

If you’re just learning about all these rules and realize you’ve missed a few years of filing, don’t panic. The IRS offers the Streamlined Filing Compliance Procedures for taxpayers who can certify their failure to file was not willful.

14. The 30% Ruling and Box 3 Changes Matter

Two Dutch tax updates are relevant for 2026:

  • The 30% Ruling: Since 1 January 2025, the 30% ruling no longer comes with the option to be treated as a partial non-resident for Box 2/Box 3 (with transitional rules for some earlier cases). And for 2026, the Belastingdienst provisional Box 3 return percentages are 1.28% (bank balances), 6.00% (investments/other assets), and 2.70% (debts).

  • Box 3 Rules: The Dutch government continues to adjust its tax treatment of savings and investments. Changes to the tax-free allowance and the deemed rates of return for different asset types (like cash vs. stocks) can change how much Dutch tax you pay, which again impacts your US tax strategy.

American hundred dollar bill with flag superimposed over it as a reminder for us expats to file their tax returns in the netherlands

15. Stop Guessing and Get It Right

For most American expats in the Netherlands, the biggest stress isn’t the final tax bill—it’s the fear of missing a form you never knew existed. Whether it’s the FBAR, Form 8938, or a PFIC issue, the complexity is real.

Making the wrong choice between the FEIE and the Foreign Tax Credit can also have long-term consequences. This is the year to properly sort out your tax situation. Working with a professional like Taxbrella, who specializes in US expat taxes, can remove the guesswork and ensure you take advantage of all the provisions designed to help Americans abroad.