The Dutch expat ruling reduces the tax you can credit in America.
There is a US–Netherlands income tax treaty and a totalization agreement. The expat ruling exempts part of your salary from Dutch tax, and the exemption has been phasing down since 2024. Less Dutch tax paid means less to credit on Form 1116, so the ruling shifts tax rather than removing it.
Tax snapshot — Netherlands
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Sources: IRS Publication 54; IRS Publication 901; US–Netherlands income tax treaty (1992, as amended); US–Netherlands totalization agreement (1990); Rev. Proc. 2025-32. Checked 28 August 2026.
What that means on your return
The ruling is being reduced in stages, which means the credit available on your US return changes year to year while your salary stays the same. That makes this one of the few postings where the same facts give a different US answer in consecutive years.
Box 3 taxes a deemed return on your net assets rather than income you actually received. It is generally not creditable against US income tax, and the Dutch litigation over how the deemed return is computed does not change the US answer.
The totalization agreement covers Dutch social insurance, so a self-employed American contributing there generally escapes the 15.3% US self-employment charge with a certificate of coverage.
If you are in the Netherlands as a…
Questions I get about the Netherlands
Does the 30% ruling save me US tax?
No — it usually moves tax rather than removing it. Exempting salary from Dutch tax reduces the foreign tax credit available, so the US may collect what the Netherlands does not.
Is box 3 tax creditable on my US return?
Generally no. It is charged on a deemed return on net assets rather than on income received, which puts it outside the income taxes Form 1116 recognises.
I already pay high tax in the Netherlands. Do I still file a US return?
Yes, every year. Citizenship-based taxation does not care what you pay locally. The foreign tax credit usually removes the US liability, but the filing obligation stands, and FBAR and FATCA reporting stand with it.
When is my return due?
15 June, under the automatic extension for filers living abroad. Form 4868 moves it to 15 October, and I file the extension free.
Do I have to file an FBAR for my Dutch bank account?
If your foreign accounts together passed $10,000 at any point in the year, yes. You can file it free through FinCEN's own system. The non-willful penalty for not filing is $16,536.
I have not filed for several years. What now?
The Streamlined Foreign Offshore Procedures: three returns, six FBARs and Form 14653 certifying non-willfulness. Penalties are waived. Note that the IRS terminated the separate Delinquent FBAR Submission Procedures around 1 July 2026.
Filing from the Netherlands this year?
Twenty minutes with the Enrolled Agent who will prepare and sign it. Complete return, $599.
An IRS Enrolled Agent working only on US tax for Americans living abroad. I prepare and sign every return myself — 17 years in practice, 12 of them as an Enrolled Agent.