European ruling on mortgage interest deduction

Recently, the European Court of Justice issued a ruling for a case in which a Director/Main shareholder who was living abroad, was able to deduct some of his paid mortgage interest in the Netherlands. What does this mean for you?

• Living abroad?
• Do you have a property there with a mortgage?
• Are you receiving an income from the Netherlands, but it is less than 90% of your overall income?
• And, in the country where you live, are you unable to use the mortgage interest you have paid because you do not receive an income from your country of residence?
• Or perhaps you can’t use other personal deductions in your country of residence?

See the article below with the ruling from the European Courts of Justice in a similar case, when it was concluded that some of the paid mortgage interest could be deducted in the Netherlands.

The case, put before the European Courts of Justice, proceeded as follows. A Dutch person living in Spain was the Director/Main shareholder of two limited companies, one of which was registered in the Netherlands, another in Switzerland. The Dutch person has a residency in Spain for which a home loan was taken out, and on which mortgage rent is being paid. His worldwide income was 60% attributable to the Netherlands, and 40% to Switzerland.

The fact that the Dutch person had not opted for qualification as a domestic tax-payer in the Netherlands meant, as far as the tax authorities were concerned, that mortgage interest was not deductible in the Netherlands.

The European Court of Justice, however, ruled that the Netherlands, ought to allow a 60% mortgage interest deduction (equal to the percentage of the worldwide income that was received from the Netherlands).

What does this mean for you?

Are you living abroad, receiving income from the Netherlands, but this is less than 90% of your family income and do you have your own home abroad for which there is a mortgage? Then, under certain conditions, in future years and/or outstanding years, you could have a share of the mortgage interest deducted (pro rata) from the income generated in the Netherlands. This does not just apply to mortgage interest, but also to other deductibles.

For more information on mortgage interest deduction 

 Does this situation sound familiar? Then contact us for a no-obligation consultation with one of our advisers to see whether the above ruling from the European Court of Justice could be advantageous to you via international@acconavm.nl or complete the contact information form.