@ronvdc wrote:
Similar situation for me: dual American-Dutch (so E.U.) citizen, living in the U.S. and working for large IT company. We're thinking of going to the Netherlands for at least a year or so to give our kids the full Dutch experience, most likely during the 2022-2023 school year. I'll be able to continue to work for my current employer from the Netherlands. Would it be possible to remain formally employed with the U.S. company while I'm there, retaining my U.S. salary, etc., or would I need to formally switch to the company's subsidiary in the Netherlands if I live and work in the country for a certain amount of time. Does the IRS have any rules in that area, or does that all depend on what the rules in the Netherlands are?
There are no visa concerns, since I am a Dutch citizen in addition to a U.S. citizen.
Thanks!
--Ron
As a US citizen, you are required to file a US tax return to report all your world-wide income, it doesn't matter if the employer is US-based or not. You will get a credit on your US tax return for taxes you pay in the Netherlands, also regardless of which office pays you.
It may be the case that if you switch your employment to a non-US employer, you won't be subject to social security and medicare tax, but that is beyond my expertise. (If that is the case, it would also mean that you would not be eligible to contribute to an IRA, since you would not have US "earned income" and you would not build up credits toward retirement or disability for those quarters that you were exempt from those taxes. You may want professional advice.)
If you are a bona fide overseas resident for at least 330 calendar days of a year, you may be eligible for the foreign earned income exclusion--this would mean that your income earned from working would be exempt from US tax, instead of being taxed and then subject to an offsetting credit. I don't see that it is required that your employer also be foreign based, just that you legitimately be a foreign resident for that year. But if you go to the Netherlands for a school year, you may never meet the 330 day rule anyway.
https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion
