Does anyone have experience with the Canadian/Netherlands tax treaty? Trying to understand the reporting requirements for a Factual Canadian working in the Netherlands temporarily (2-3 years) as a “skilled foreigner”. As such, they currently pay about 30% less tax in the Netherlands.
Under the Convention Between Canada and the Kingdom of the Netherlands, it appears that this individual falls under Article 15: Dependent Personal Services.
I am unsure about how the Canadian tax return should be completed. Do they just claim a FTC against the income & taxes paid or are they allowed to claim a deduction at Line 25600 and treat the income as exempt?
Any experience in this area or if you could point me in the right direction for additional research would be greatly appreciated.
Depends whether they are tax resident in Canada while working in the Netherlands. If they are (family stayed behind etc) then they file the Netherlands return, which calculates taxes on the income per their rules and then you report it on the Canadian return and claim any tax paid on the income. It is not exempt and you can’t deduct it out on line 25600. If they are non-residents of Canada (essentially picked up and moved, selling any real estate in Canada or renting it out long term, take spouse and kids if any with them and have limited trips back to Canada), then they file a departure return up to the date they left and nothing (possibly S216 if renting out Canadian family home) while in the Netherlands. They then file a re-entry return when they come back.