There is one administrative act that can save YouTube creators thousands of euro a year, and many people do it too late: filling in your tax details in your Google account. Fail to do it and Google withholds a high percentage by default. And not only on your American income.
This article explains why that happens, what the treaty between the Netherlands and the United States changes about it, and how to process the withholding in your Dutch return.
Why American tax is in play at all
Google is an American company and pays you a fee that counts as a royalty under American law. The United States levies tax at source on royalties going abroad. Google is obliged to make that withholding, and to know how much it has to know who you are and where you live.
For that Google asks for your tax details in your account. In practice you are filling in the equivalent of a W-8BEN declaration: you declare that you are not a US taxpayer and that you live in the Netherlands, and you claim the benefit of the tax treaty.
What happens if you fill in nothing
Then Google assumes the worst case. Without valid tax details a high default percentage is withheld, and, this is the point that surprises people, on your worldwide income rather than only on the part coming from American viewers.
For a Dutch creator with mainly Dutch and European viewers that is an enormous difference. Your American viewer share can be a few percent, while the withholding applies to the full amount.
Concretely: with 30,000 euro of AdSense income in a year and a default withholding of 30 percent on the whole, you are talking about 9,000 euro. With the details filled in correctly that can go to virtually nothing. That is not optimisation, that is a form.
What the treaty does
The Netherlands and the United States have a tax treaty that among other things governs withholding tax on royalties. On the basis of that treaty the percentage withheld on your royalties can be reduced, and for royalties between the Netherlands and the US that comes down to nil.
To claim it you have to do two things. You declare that you are resident in the Netherlands, and you explicitly claim the treaty benefit in the form Google puts in front of you. That second part is a separate section people skip: filling in your details without ticking the treaty part still leaves you with a withholding.
What remains, even with a valid treaty claim, is the withholding on the part of your income that comes from American viewers and does not fall under the royalty provision. Google splits that out in your monthly reporting.
How to fill this in
In your Google account, in the payments section, there is a part for United States tax info. What you need:
- Your details as an individual or as a business, depending on which name your AdSense account is in
- Your Dutch tax identification number. For a sole trader that is your citizen service number, for a BV the tax number
- The declaration that you are not a US taxpayer
- The treaty claim, with the Netherlands as country of residence
Watch one thing on point 1: if your account is in your personal name while you have a business, your records do not line up with your return. Put the account in the right entity, and do that before the income mounts up.
The declaration expires after a number of years and then has to be submitted again. Put that in your calendar, because Google does give warning but that message arrives in an inbox you do not check daily. An expired declaration means back to the default percentage, and you notice it in your payout.
How to process the withholding in your Dutch return
This is the part that goes wrong in the records. If American tax is withheld, your turnover is the gross amount, not the amount arriving in your account. The withholding is not a cost you deduct from your turnover, but foreign tax paid.
That distinction matters because for foreign tax paid you may be able to get relief in the Netherlands, so you pay less here. Treat it as a cost and you reduce your profit and leave that relief unclaimed. That can work out wrong twice over.
What you need for this:
- Google's monthly or annual report showing the gross income and the tax withheld
- The split between income from American viewers and the rest, where it is given
- Your completed treaty declaration as substantiation of the percentage applied
Keep those reports per year. They cannot always be retrieved in full afterwards, and without those documents relief cannot be substantiated.
And what about VAT?
Separate story, different track. For VAT, Google is a business customer outside the EU, so the service you supply falls outside Dutch VAT and there is no ICP return. You still file quarterly and reclaim the VAT on your equipment. See VAT on your platform income and the ICP return.
Sponsors, memberships and other YouTube income
AdSense is one stream. Alongside it you often have:
- Channel memberships and Super Thanks. These run through the platform, so the same treatment as AdSense.
- Direct sponsorship deals. A contract with a brand, outside YouTube. That is an ordinary service to that party, with the VAT treatment belonging to where that party sits.
- Affiliate income. Depends on where the affiliate programme sits. Often a foreign party, sometimes a Dutch one.
Those streams may sit in one set of records, but the substantiation per stream has to stay separate. The VAT treatment differs per customer.
Reading your monthly report
Google's report is the document all of this can be substantiated with, and most creators have never opened it. What to look for in it:
- The gross income for the period, worldwide
- The breakdown by viewer country, or at any rate the part counting as income from American viewers
- The amount withheld and the percentage applied
- The amount paid out, and the currency
Save those reports monthly, in a folder per year. This is not excessive caution: if you ever want to reclaim over-withheld tax, or substantiate relief in the Netherlands, this is the only evidence there is. And platform reports are historically not available indefinitely.
The payout threshold and the year boundary
AdSense only pays out above a threshold. Below it, your balance stays put. Fiscally that money has already been earned, so it belongs in the year it built up in, even while it is still with Google.
For a channel in its build-up phase that means a balance sitting for months that belongs on your balance sheet at 31 December as a receivable. For a bigger channel it means December's income belongs in the old year while the money arrives in January. Both are forgotten as a matter of course, and both shift your profit between two years. See the income tax return as a content creator.
What else you can deduct around a channel
The withholding is one side. On the cost side a YouTube channel has a profile that differs from other platforms, and these are items specific enough to be forgotten:
- Music and sound licences, often a subscription you need to avoid claims
- Stock footage and templates
- Thumbnails you commission
- An editor or assistant
- Software for editing, colour and audio
- Equipment, where the line between deducting and depreciating decides which year it lands in. See deduct or depreciate
For a channel running seriously this mounts up to an amount covering a substantial part of your profit, and it is the side of the sum you have influence over yourself.
Frequently asked questions
I have not filled this in for years. Can I get the tax withheld back?
There are routes to reclaim over-withheld American tax, and they run through the American tax authority. It is laborious and there are time limits. The practical first step is to fill in your declaration correctly now so it stops, and then look at what is still achievable for past years.
Do I have to apply for an American tax number?
For the treaty claim your Dutch tax number is generally sufficient. An American number is usually not needed for this situation.
My AdSense is in my private name but I have a sole trader business. Is that a problem?
Fiscally the sole trader business and you are the same person, so the income belongs in your profit. Administratively it is untidy, and with a BV it is a genuine problem. Put the account in the right name.
Does this apply to other American platforms too?
The principle of withholding tax on royalties arises with several American parties. Whether and how it applies differs by platform and by type of fee, so check per platform what is asked in your payment settings.
If your account is in the wrong name
An AdSense account in your private name while you have a business is fiscally not a problem for a sole trader: the business and you are the same person. With a BV it is, because the income then arrives with you instead of with the company that should have received it.
Even with a sole trader it is administratively untidy: your tax details at Google, the name on the payouts and the entity in your records ought to match. If your situation changes, on a conversion to a BV for instance, moving the account is one of the things that has to be arranged before the conversion and that is forgotten as standard. See from sole trader to BV as a creator.
In closing
Of all the subjects we discuss with creators, this is the one with the highest return per minute. One form, filled in correctly, treaty section included, and renewed on time.
We check this as standard at start-up and at year-end, see bookkeeping for Twitch and YouTube.