If you moved to Amsterdam, Rotterdam or The Hague on the 30% ruling, your Dutch payslip looks generous and your US return looks strange: the IRS taxes the full salary, including the part the Netherlands leaves alone. That one fact decides how most Americans here should file. The other thing that catches people is Box 3, a Dutch wealth-style tax that the US may not give you any credit for.
Below is how we handle a Netherlands-based return, in roughly the order clients ask about it.
When are the Dutch and US returns due for 2025?
Both countries tax the calendar year, so your jaaropgaaf (annual wage statement) lines up with the US return. The deadlines don’t:
- 1
15 April 2026: US tax payment due
Any US tax owed is due now, even though the return isn’t. Interest runs from this date.
- 2
1 May 2026: Dutch aangifte inkomstenbelasting
The normal deadline for the 2025 Dutch return. Ask for uitstel (an extension) through Mijn Belastingdienst before then and you get until 1 September; a Dutch adviser can usually get longer.
- 3
15 June 2026: US Form 1040 for Americans abroad
Automatic if you live and work outside the US on 15 April. Attach a statement saying you qualify.
- 4
1 July 2026: the M-form, if you moved in or out during 2025
The M-biljet covers a migration year. It isn’t available until 1 May 2026, so it’s the one Dutch return that’s regularly later than the US one.
- 5
15 October 2026: US return with Form 4868
File Form 4868 by 15 June to get here. The FBAR is extended to 15 October automatically.
Income through the year converts at the IRS yearly average rate, which for 2025 is €0.886 per $1 (about $1.13 per euro). One-off events like a house sale or a fund redemption use the rate on the day.
How does the 30% ruling work on a US return?
The 30% ruling (the Dutch expat regime) lets your employer pay up to 30% of your salary as a tax-free allowance for five years, as long as you meet the salary norm. For 2025 that norm is €46,660, or €35,468 if you’re under 30 with a master’s degree, and the ruling only applies to salary up to €246,000. From 2027 the percentage drops to 27% for anyone whose ruling started on or after 1 January 2024; rulings that began before then keep 30% for their full term.
The US ignores all of it. Your wages on the 1040 are the gross figure, allowance included. So a ruling that cuts your Dutch tax also cuts the foreign tax credit you have to work with, and that is why the foreign earned income exclusion, which is usually second best in a high-tax country, often wins here.
There’s a second wrinkle in the Dutch rate itself. The first Box 1 bracket for 2025 is 35.82% up to €38,441, but only 8.17% of that is income tax. The other 27.65% is national-insurance premium (volksverzekeringen: AOW, Anw and Wlz). The totalization agreement between the two countries covers Dutch social insurance, and we don’t claim those premiums as a US tax credit. The higher brackets, 37.48% to €76,817 and 49.50% above, are income tax proper.
Say you’re on a €90,000 salary in Amsterdam with the 30% ruling
Your employer treats €27,000 as the tax-free allowance, so the Belastingdienst taxes €63,000. Before the standard tax credits (heffingskortingen), Box 1 on that is about €22,975. The general credit and the labour credit take off about €5,200 at that income, leaving roughly €17,800 of Dutch tax and premiums. Of that, around €11,200 is income tax and the rest is premium.
On the US side your wages are the full €90,000, which is $101,580 at the 2025 rate. After the $15,750 standard deduction, single, US tax comes to about $13,800.
With the foreign tax credit: the creditable Dutch income tax, about €11,200 or $12,600, doesn’t quite cover it. You’d owe the IRS roughly $1,200.
With the exclusion: $101,580 is under the $130,000 limit, so all of it is excluded and US tax is $0. On a bigger salary the housing exclusion would add to that: rent and utilities above the $20,800 base, up to a 2025 limit of $52,900 of housing costs in Amsterdam ($52,100 in The Hague).
Illustrative and rounded. We’ve left out pension contributions, which lower both the Dutch and the US figure.
Once the ruling ends, or if you never had it, the picture flips. At €90,000 fully taxed you’d pay well over $13,800 in Dutch income tax alone, the credit would take you to zero, and the unused excess would carry forward ten years. Switching from the exclusion back to the credit is allowed, but after revoking the exclusion you generally can’t return to it for five years, so we plan the switch rather than drift into it.
Box 3: what the Netherlands taxes, and whether the IRS gives credit
Box 3 doesn’t tax what your savings earned. It taxes what the government assumes they earned, based on what you held on 1 January. For 2025 the deemed returns are 1.37% on bank balances, 5.88% on investments and other assets, and minus 2.70% on debts. The first €57,684 per person is exempt, and the deemed return on the rest is taxed at 36%.
The Hoge Raad (the Dutch Supreme Court) has ruled more than once that this breaches property rights when your actual return was lower. Its June 2024 judgment led to the tegenbewijsregeling: you can now show your actual return, realised and unrealised, and pay on that instead if it’s lower. In a year when markets fell, that is worth doing.
Is Box 3 a creditable tax? Nobody knows for sure
US foreign tax credit rules are built around taxes on income you actually realised. Box 3 is a tax on a presumed return from assets, so on the Code alone it looks like it fails. The counter-argument is the treaty: Box 3 is part of the Dutch inkomstenbelasting, which the US–Netherlands treaty names as a covered income tax, and the treaty’s double-tax article survives the saving clause. There is no IRS ruling either way.
Our lean: we don’t claim Box 3 by default. Where it would actually reduce US tax, we claim it under the treaty and disclose the position on Form 8833. Often it wouldn’t, because the credit can only offset US tax on passive income, and a buy-and-hold investor may have very little of that in a given year.
Take Jason, a single American in Utrecht with savings and an index fund
On 1 January 2025 Jason has €40,000 in a savings account and €150,000 in a Dutch-listed world index fund with his bank.
Box 3: the deemed return is €548 on the savings and €8,820 on the fund, €9,368 in total. After his €57,684 exemption, Box 3 income is about €6,520 and the tax is about €2,350 (roughly $2,650).
On his US return the fund is a PFIC. If he hasn’t sold and has no election in place, the US taxes nothing on it this year, so there’s no passive income for a Box 3 credit to offset. If he has a mark-to-market election and the fund rose €15,000, that’s about $16,900 of ordinary income, and that is the year a treaty claim for Box 3 might be worth making.
Illustrative and rounded, using the 2025 Belastingdienst percentages.
Are Dutch funds PFICs?
Yes, almost always. Any non-US fund, whether it’s a Dutch-domiciled index fund, an Irish UCITS ETF bought through DEGIRO, or the funds inside a bank’s managed portfolio, is a Passive Foreign Investment Company for US purposes. Each generally needs a Form 8621, and without an election a sale is taxed at the top US rate for every year you held it, plus interest. The mark-to-market election, for listed funds, turns that into ordinary income each year, which is cleaner but not cheap.
What we tell most clients: keep what you have on Form 8621, make a deliberate election, and put new money into individual shares or a US brokerage that will take a Dutch address.
What happens to my Dutch pension on the US return?
Most employees in the Netherlands are in a pensioenfonds through their job, whether that’s ABP, PFZW, PMT or a company fund. Your share of the premium comes off your salary before Dutch tax. The 2004 protocol to the US–Netherlands treaty added pension rules to Article 19, including one written for US citizens living here: contributions to a Dutch plan made while you work for a Dutch employer can be excluded or deducted on your US return too, and your employer’s contributions aren’t US income. The relief is capped at the lesser of what the Netherlands allows and what the US would allow for a similar US plan.
The AOW state pension is simpler than it is in most countries. Article 19(4) of the treaty makes Dutch social security paid to a US citizen taxable only in the Netherlands, and the treaty specifically lets that override the US saving clause. US Social Security paid to you while you live here is taxable only in the US.
Lijfrente is the Dutch private annuity: a lijfrenterekening at a bank or a lijfrentebeleggingsrecht with a broker, deductible in Box 1 within your jaarruimte. The treaty contribution rule is written for employer plans, so we don’t treat lijfrente premiums as deductible on the US side, and we don’t treat the growth as sheltered. A lijfrente savings account is just a foreign bank account for the FBAR. A lijfrente invested in funds brings the PFIC problem with it, so we steer Americans towards the pensioenfonds and away from topping up with lijfrente.
Social security: do I pay into both?
No. The US–Netherlands totalization agreement, in force since November 1990, puts you in one system. Working for a Dutch employer means Dutch premiums only. Sent here by a US employer for up to five years, you can stay in US Social Security with a certificate of coverage. Self-employed people working only in the Netherlands are generally covered by the Dutch system and need that certificate from the Sociale Verzekeringsbank each year to stay out of US self-employment tax. The exclusion doesn’t remove self-employment tax; only the certificate does.
Your Dutch mortgage, and a currency gain nobody expects
Hypotheekrenteaftrek, the Dutch mortgage interest deduction, is worth at most 37.48% of the interest for 2025, even if you’re in the 49.50% bracket. On the US side, mortgage interest only helps if you itemize, and most people on the exclusion or with plenty of Dutch credit don’t bother.
The trap is §988. Your mortgage is a euro debt, and the IRS measures it in dollars. If the euro has fallen against the dollar between the day you borrowed and the day you repay, including when you sell and pay off the loan, you have a taxable exchange gain on the 1040 even though you paid back exactly what you borrowed. A loss on a personal mortgage isn’t deductible. On sale, the §121 exclusion covers up to $250,000 of gain ($500,000 married filing jointly) on a main home, with the gain itself also computed in dollars.
Toeslagen, kinderbijslag and DUO
Zorgtoeslag, huurtoeslag and kindgebonden budget are income-tested government support, and kinderbijslag from the SVB is a family benefit. We treat them as outside US income. Kinderopvangtoeslag is paid towards childcare you’ve bought, and we treat it the same way.
If you study here, DUO student loans aren’t income. The basisbeurs grant can be: for US purposes, grant money not spent on tuition and required fees is taxable scholarship income, although it’s usually small enough to vanish under the standard deduction.
FBAR, Form 8938 and why your Dutch bank asks for a US tax number
If your non-US accounts together topped $10,000 at any point in 2025, you file an FBAR. That includes your betaalrekening, spaarrekening, broker accounts, and accounts you can sign on for someone else. Form 8938 comes on top once foreign assets pass $200,000 at year end or $300,000 at any time living abroad, double that for joint filers. Our FBAR guide covers the detail, or we can file it for you.
Dutch banks report US account holders to the Belastingdienst under the FATCA agreement, and the data reaches the IRS. Some have written to customers demanding a US tax number and closed accounts that couldn’t provide one, which is how a lot of Dutch-born Americans found out they had a US filing duty at all. If that’s you, the Streamlined procedures are usually the way back in. Don’t forget your old state either: some keep treating you as a resident after you leave, which our state tax guide explains.
What we’d do for you
For most of our clients in the Netherlands we run the return both ways (exclusion and credit), put the pensioenfonds contributions in properly, take a clear position on Box 3, and get any Dutch funds onto Form 8621 before they become a bigger problem. If you’re on the 30% ruling, we also map out the year you should switch to the credit, so the 2027 cut to 27% or the end of your ruling doesn’t land as a surprise. Our US expat tax guide has the general rules.