European decision on the mortgage interest deduction

Recently, the European Court of Justice issued a decision in a case in which an executive residing abroad with significant business interests was able to take credit for a portion of the mortgage interest paid in the Netherlands. What this means for you?

• Do you live abroad?
• Do you have a condo there with mortgage debt?
• Do you have income from the Netherlands that is less than 90% of your worldwide income?
• And can you not use your mortgage interest paid in the country where you live because you have no income in the country of your residence?
• Or can you not use other personal deductions in your country of residence?

Then see the article below about the decision of the European Court of Justice in a similar case, in which it was decided that part of the mortgage interest paid can be credited in the Netherlands.

Mortgage interest deduction

The case that was submitted to the European Court of Justice was as follows. A Dutch resident in Spain was a director with significant business shares in two companies based in the Netherlands and Switzerland. The Dutchman has a condominium in Spain, for which a financing of home ownership was concluded, on which mortgage interest is paid. His world income was 60% attributable to the Netherlands and 40% to Switzerland.

Because the Dutch person had not opted to be classified as a domestic taxpayer in the Netherlands, no mortgage interest in the Netherlands could be imputed by the taxpayer.

The European Court of Justice has now ruled that the Netherlands must allow a mortgage interest deduction for 60%, in proportion to the share of world income from the Netherlands.

What does this mean for you?

Live abroad, receive income from the Netherlands that is less than 90% of your world income and have a condo with a mortgage debt abroad? Then, under certain conditions, you can take the position for the coming years and/or years still open that a part of the mortgage interest deduction can be credited pro rata to the income from the Netherlands. Incidentally, this applies not only to mortgage interest but also to possible other personal deductions.

Further information

Does this situation apply to you? Please contact one of our advisors without obligation to check whether the above-mentioned decision of the European Court of Justice can be advantageous for you. You can react by means of the advice form.