We really had no idea what to expect when it came time to pay taxes on our business earnings in the Netherlands. We knew overall tax rates were higher than in the US and braced ourselves at tax time.
The US is one of only two countries, the other being Eritrea, that taxes its citizens on their worldwide income. We file a Foreign Earned Income Exclusion, Form 2555 for our Dutch income which relieves us of our duty to pay US taxes on our earnings. Because the US has a tax treaty with the Netherlands, this relieves us of the obligation to pay US self-employment tax on our Dutch earnings. We must file a tax return each year in order to claim the exclusions.