Relocating, Moving to Netherlands

[x9200]

I don't think it is going to be very different tax-wise regardless the telejob or more physical one.

It's not. Work is where you perform it, not how long the wire or wireless connection is between you and somebody or something else. If your office is on Wall Street, it doesn't matter whether you're trading bonds in Hong Kong, equities in London, or foreign currency in Singapore. You're working in New York City, and you're subject to city, state, and federal taxes. This is not new. In fact, the income tax was introduced in nearly all countries that have it after the invention of the telegraph in the first half of the 1800s.

It's not that much about work. It's about the benefits. Taxes are paid to compensate (and more) for the use of the infrastructure - wide meaning of this word, not only material. If one uses a place to obtain his income he should pay taxes in that place because he uses the infrastructure and is a beneficiary of the system.

So yes, an 18 month stint working in the Netherlands and contributing into the Dutch system should mean qualifying for a modest future retirement benefit. I don't think a lump sum withdrawal is allowed. It would be a future monthly annuity, in all likelihood.

It is ca €20 monthly per year of the employment I believe.

[x9200]

Oh, and they have lots of tulips! And even a few windmills. It's lovely.

Yes, you bring up a good point I neglected to mention... you get what you pay for. Lower tax rates in Singapore, and less services returned by the gahmen.

At this point, if I had the choice of paying higher taxes, more stability, and looking at windmills, I do believe I'd choose that over lower taxes, more uncertainty, and the Merlion.

Actually...depending what you mean by the gov services, I don't really think SG is that bad comparing to NL. Past knowledge. Not sure how is it now. Having said that, my choice would be likely similar, but not necessary for the same reasons.

[BBCWatcher]

Taxes are paid to compensate (and more) for the use of the infrastructure - wide meaning of this word, not only material.

Even with a wide meaning, no, I disagree. Governments are not like restaurants, nor should they be. You aren't buying burgers at Burger King -- this isn't a "fee for service" arrangement, at least not in any country with progressive taxation. Developed countries, at least, don't put orphaned infants to work to pay taxes for their state-provided milk and diapers.

Taxes, at least the general ones, are simply to raise revenues to sustain government-provided goods and services. That's it. They are not transactional, and the examples proving they are not transactional (even in wide meaning) are everywhere.

I find that some wealthy adults like to make that sort of argument, because it's self-serving of course, but it's also b.s.

[x9200]

Taxes are paid to compensate (and more) for the use of the infrastructure - wide meaning of this word, not only material.

Even with a wide meaning, no, I disagree. Governments are not like restaurants, nor should they be. You aren't buying burgers at Burger King -- this isn't a "fee for service" arrangement, at least not in any country with progressive taxation. Developed countries, at least, don't put orphaned infants to work to pay taxes for their state-provided milk and diapers.

Taxes, at least the general ones, are simply to raise revenues to sustain government-provided goods and services. That's it. They are not transactional, and the examples proving they are not transactional (even in wide meaning) are everywhere.

I find that some wealthy adults like to make that sort of argument, because it's self-serving of course, but it's also b.s.

You just used a different name to what I called an infrastructure. Mine infrastructure are your goods and services, that's why I emphasized on the wide perception of that term. It is not like a restaurant, sure, because there is a social fairness component in this, but it varies, so sometimes you may still pay taxes even with no regular income.

The concept of the law (taxes being a part of it) is generally based on social fairness, logic and pragmatism but going sufficiently general with the abstraction level one may actually conclude it is sort of a restaurant where your orphaned infants pay their taxes too, just not with the hard money and not immediately after drinking their milk.

[BBCWatcher]

It's a very strange restaurant then. Let's consider a couple extended scenarios:

1. The orphan unfortunately dies at age 12. Who pays that orphan's restaurant bill? Not the orphan.

2. The orphan leaves the Netherlands at age 18, healthy and well educated, but never to return. Who pays that orphan's bigger restaurant bill? Still not the orphan.

3. The orphan leaves the Netherlands at age 18, healthy and well educated, and returns to the Netherlands at age 69, sick and destitute. Who pays the orphan's even bigger restaurant bill? Still not the orphan.

I disagree with your framing. I don't think it makes any sense.

[x9200]

It's a very strange restaurant then. Let's consider a couple extended scenarios:

1. The orphan unfortunately dies at age 12. Who pays that orphan's restaurant bill? Not the orphan.

2. The orphan leaves the Netherlands at age 18, healthy and well educated, but never to return. Who pays that orphan's bigger restaurant bill? Still not the orphan.

3. The orphan leaves the Netherlands at age 18, healthy and well educated, and returns to the Netherlands at age 69, sick and destitute. Who pays the orphan's even bigger restaurant bill? Still not the orphan.

I disagree with your framing. I don't think it makes any sense.

BBCW, at higher abstraction level it's a probabilistic system running as an average so you don't count each and every individual, and all the individual events leading to gains and loses. Some will die, some will be born in their place to pay that tax at the double rate, some will leave the country, some will arrive to it, both educated and uneducated. Large societies are based on probabilistic principles. If you prefer to follow the restaurant analogy, also here some clients may leave without ordering anything, some food may be spoiled and some new clients may arrive from another restaurant. As long as some longer term average for all the gains and loses is positive, it will continue to serve another generation of the clients.

[tj_al]

In case you were wondering, ordinarily foreigners need a minimum of 5 years of continuous legal residence in the Netherlands to be eligible to naturalize as a citizen.

I agree with Strong Eagle, and consequently I recommend keeping things simple or at least no more complex than they need to be.

Will your next REP renewal be before or after this 18 month stint?

After. It is 2019. Got it in 2014.

[BBCWatcher]

After. It is 2019. Got it in 2014.

Oh, that could work quite well. Let's assume your Dutch adventure begins on April 1, 2016, and runs until September 30, 2017 (18 months). You then return to Singapore and resume work on/in the Red Dot. Fast forward to 2019, and you've got ample Singapore physical presence, earned income, and taxes paid starting from October 1, 2017 (and earlier, back for part of 2014 at least). It's hard to imagine you would get anything less than a one or two year "probationary" REP renewal, and a five year renewal would still be likely in this scenario or similar. You are not required to renew your REP before (or after) it expires, but you just can't leave Singapore and hang onto your PR status without a valid REP -- even to take a bus to Johor Bahru.

OK, let's suppose you fall in love with the Netherlands and stay 24 months, until March 31, 2018. Then you return to Singapore. That's still fine. You're increasing the odds of a "probationary" REP renewal versus a standard renewal in 2019, that's all. When you apply for a renewal ICA has three basic choices: outright rejection, "probationary" renewal term (not official terminology), or standard 5 year renewal term. The more you shift away from being a de facto resident of Singapore, the lower the probability of a standard renewal term -- it's just that simple. (Exactly what the formula is nobody knows, and ICA isn't telling.)

[x9200]

After. It is 2019. Got it in 2014.

So how much time have you accumulated so far? 1y?
I think what is probably critical for keeping the status and having some REP millage granted (1y or the full period) is what happens within 1 year or so immediately preceding the renewal deadline. If you land back with (and maintain) a job paid better than the one under which you had been granted the PR, I would be surprised if your REP was not renewed.

[tj_al]

Yes. Cumulatively I am looking at just right above 12 months' of residence post-PR approval before the Netherlands this July. The original plan is to return to Singapore after spouse's 18-month assignment, which I really hope it would stay this way.

Regarding Dutch tax, I don't mind paying Dutch tax if it is required for someone in my position to do so, even though I would potentially looking at the second bracket of 40.4%. What confuses me is whether I am paying for both Dutch and SG tax or just Dutch tax?

And what about CPF? Does being employed by SG employer but living overseas mean that the employer would have to make contribution even though I would not be present in Singapore?

[BBCWatcher]

Regarding Dutch tax, I don't mind paying Dutch tax if it is required for someone in my position to do so, even though I would potentially looking at the second bracket of 40.4%.

I don't think there's any question whatsoever you would be required to pay tax in the Netherlands. When working in the Netherlands you would pay Dutch taxes first. To the extent that income is also Singapore taxable there'd be a foreign tax credit for your Dutch income tax. Since it's hard to imagine your Singapore tax rate being higher than your Dutch tax rate, the foreign tax credit in Singapore would zero out your Singapore income tax on that income.

For Singapore source income it works the other way: pay Singapore first, foreign tax credit in the Netherlands. The Dutch tax rate is generally higher, so you'd pay some more there.

I'm describing the conventional, normal arrangement. If there's a tax treaty that says otherwise, you can follow that. The Netherlands-Singapore tax treaty might say, for example, that only Singapore gets to tax your bank interest in Singapore (it doesn't at present), or whatever.

And what about CPF? Does being employed by SG employer but living overseas mean that the employer would have to make contribution even though I would not be present in Singapore?

No. According to CPF, if you're working overseas then CPF contributions (employer and employee) are not mandatory. Voluntary contributions are allowed, but there is a limit.

Please note that generally you must report gross income, so unless a tax treaty says otherwise then your reportable income in the Netherlands will include your employer's voluntary CPF contributions on your behalf. That's income too, and it counts.

Tax policies generally don't change simply because the corporate entity is in Country X or the bank account where you receive the income is in Country Y. Work is where you perform it, and residence is residence. That basic principle is very simple and at least near universal. Remember it well, and you'll be in pretty good shape when you try to understand income taxes and social insurance taxes. If you're receiving income from a Singapore entity while living in the Netherlands then most likely the Dutch tax authority will consider you as self-employed, and so you'd make your own Dutch social insurance contributions and otherwise be taxed as a self-employed individual.

[Strong Eagle]

What confuses me is whether I am paying for both Dutch and SG tax or just Dutch tax?

And what about CPF? Does being employed by SG employer but living overseas mean that the employer would have to make contribution even though I would not be present in Singapore?

Look... if you live in NL, you pay NL tax. You don't pay SG tax. Read the tax treaty. It's all about your physical residence that determines where you are taxed. Period. End. Exception: If you have rental property in Singapore, the income will be taxed in Singapore but not in NL.

CPF: You don't pay CPF if you are not physically present in Singapore. You can choose to voluntarily top up your CPF account but you and your employer are under no obligation to pay CPF.

[ecureilx]

CPF: You don't pay CPF if you are not physically present in Singapore. You can choose to voluntarily top up your CPF account but you and your employer are under no obligation to pay CPF.

A think a law has been passed or is in progress, to make CPF Medi Save compulsory for SC / PR not staying / working in Singapore.

[BBCWatcher]

Yes, the MediShield Life premiums (taxes) were already mentioned upthread.

[the lynx]

I think based on your situation, you will not be taxed both SG and Dutch tax. Definitely yes for Dutch tax. And oh, if you are already paying for MediShield in SG while you are in NL, you can seek to pay only the difference (or none) of the Dutch national insurance premium imposed to all residents in NL.

Theoretically speaking, you don't have to pay for CPF if you're not residing in Singapore but BBC already pointed out that you still have to pay for the MediShield. Based on this, you are definitely looking to pay what's left of that 28.15%. Unless of course, you make above EUR33k annually which would exempt you from that (but you'll have to pay 40.4% tax on that income bracket instead).