UP / Thumb of Michigan | Yanny - 1/25/2026 13:03
I’ve always been told since I was a boy in the 90s that they are Income tax free for the first 5 years they come here then they sell off the dairy or start a new one in another relatives name that immigrates and then they get another 5 years income tax free. Almost everyone around here believes that, I guess prove me wrong?
Only reason I asked I guess- that tax break story was common knowledge in the Thumb when the Dutch and Irish emigrated here to start dairies. My CPA does taxes for many of them, and said she has no knowledge of any tax breaks that others quoted. Said they were paying taxes like everyone else.
I do know there was a tax program available to prevent double taxation between the Netherlands and the US . Without knowing the details, that sounds like a fair policy.
The same story has always circulated about foreign party store and motel owners. Which again, my CPA disputed and I was never able to find anything to prove different. I am friendly with an Iraqi born store owner who's been in the US for close to 30 years. He tells me anyway that there's no special tax consideration available to them either. He has no children, so he sold his store to a "regular" buyer. As far as other Chaldean stores being sold to more Chaldeans after a period of time, they liken that to the same thing we do- put the next generation in business.
Anyway, this is all I could find on the internet concerning the Dutch (and I'm going to assume the Irish) dairies.
U.S. Tax Rules for Dutch Dairy Owners
U.S. Farming as a Business: A Dutch owner operating a U.S. dairy farm is considered a U.S. farmer for tax purposes and must follow the IRS Farmer's Tax Guide (Publication 225).
Tax Treaty Benefits: The U.S.-Netherlands Tax Treaty helps prevent double taxation, allowing credits for taxes paid in the Netherlands or the U.S. on the same income, but it doesn't grant unique dairy subsidies.
Foreign Entity Rules (PFIC/CFC): If a Dutch company (BV) owns the U.S. farm, U.S. tax rules for Passive Foreign Investment Companies (PFICs) or Controlled Foreign Corporations (CFCs) might apply, but active farms with operational income and employees are usually exempt from the harsher PFIC rules.
Local Incentives vs. Tax Breaks
TIF Agreements: Some Dutch-owned farms in the U.S. have used Tax Increment Financing (TIF), where new property tax revenues are directed to specific local projects (like schools or roads) to offset community costs, but this is a redirection, not a permanent tax reduction.
No "Free" Money: Studies indicate these arrangements often mean the farmer pays the same amount but the funds go directly to local needs, essentially covering public service costs the dairy creates, rather than being a general tax discount.
Key Takeaway: Dutch dairy owners face U.S. taxes like any other farmer, with relief only coming from standard tax treaties or specific local deals, not inherent Dutch privileges. |
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