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Dutch Tax System: Income, Deductions, and Tax Rates

Learn about the Dutch income tax system, including topics such as fiscal partnership, tax credits, allowances, and deductions for residents and non-residents. Understand the tax rates and how income from employment, savings, and investments are taxed.

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Dutch Tax System: Income, Deductions, and Tax Rates

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  1. Jongbloed Fiscaal Juristen N.V.WelcomeTax Lunch Universiteit TwenteThursday February 9th 2012Dutch tax return 2011 Joris Elfrink, tax advisor

  2. The Dutch income tax system Fiscal partnership Tax credits Allowances 30% Ruling Tax return 2011 Topics

  3. General Living in The Netherlands: resident taxation - Taxation over world wide income and world wide assets - Tax treaties will avoid double taxation Living abroad: non-resident - Taxation only over Dutch income: (self) employment and real estate in the Netherlands - Non-resident can opted for resident status to claim tax deductions The Dutch tax system (1)

  4. Box 1: income from (self) employment, primary residence Box 2: income from substantial interest Box 3: income from savings and investments The Dutch tax system (2)

  5. Box 1: income from (self) employment, primary residence Income Wages (incl. company car) Pension payments Income from self-employment Income from other economic activities Periodic benefits (alimony) Primary residence, owner-rental-value (not in case of a rental house as primary residence) The Dutch tax system (2)

  6. Box 1: income from (self) employment, primary residence Deductions for residents and opted non-residents Interest and financing costs mortgage primary home - Alimony paid to ex-spouse Child-support payments (fixed amounts) Education costs Certain medical expenses Certain donations The Dutch tax system (3)

  7. Box 1: income from (self) employment, primary residence Deduction education The study was aimed at your current position or your future position. The total expenses are deductible, except a threshold of € 500. Tuition fees Costs for literature/study/schoolbooks Computer used for the study (3 year depreciation, 10% residual value) Promotion costs (reception, rent for clothing etc.) Costs of thesis (printing, registration etc.) Not deductible are costs for loans, living expenses, travel expenses and in case of promotion: a diner, after party and photo shoot etc. The Dutch tax system (4)

  8. Box 1: income from (self) employment, primary residence Deduction medical expenses The following specific medical expenses are deductible, only if they are not covered by a medical insurance: Medical and surgical help Prescribed medicines Medical aids (hearing aid, dentures, prostheses) Travel expenses to visit a doctor or Prescribed diets Adjustment to a home or car Additional home help You can only deduct expenses exceeding a threshold amount. The height of the threshold depends on your income. The Dutch tax system (5)

  9. Box 1: income from (self) employment, primary residence Deduction donations Only for payments to a Public Benefit Organisation (ANBI = Algemeen Nut Beogende Instelling) Ordinary donations: Not deductible 1% threshold of your income - ANBI Payments proved by bank statements “nothing in return” Periodical donations: Fully deductible (no threshold) ANBI Minimum period of 5 years Drawn up by a civil-law notary “nothing in return” The Dutch tax system (6)

  10. Box 1: income from (self) employment, primary residence Tax-rates box 1 Taxable income in euro’s 0 – 18.628 33.00% 18.628 – 33.436 41.95% 33.436 – 55.694 42.00% > 55.694 52.00% In the first and the second bracket of box 1 the national social securities are levied at a rate of 31.15%. The Dutch tax system (7)

  11. Box 2: income from a substantial interest Benefits of dividends and gains on sale of one or more shares in a corporation when you hold at least 5% of the shares in this corporation (for example private limited company). 5% shares held by yourself, together with a spouse or children. Tax rate : 25% The Dutch tax system (8)

  12. Box 3: income from savings and investments The net assets (assets minus debts) valued on January 1st are deemed to generate a fixed return on investment of 4% per year. This fixed return is taxed in box 3 at a 30% taxrate. Effectively: 4% x 30% = 1.2% taxation over the value per January 1st For Dutch residents, the taxable base is exempt for € 20.785 per person and € 2.779 per child. All income from investments (e.g. dividends and interest) is as such not taxable. Assets that are intended for daily use are also not taxed in box 3 (car, furniture, etc.). Non-residents are subject to taxation only on the net value of Dutch assets: - Dutch real estate not used as the primary residence - Profits rights in a Dutch company, unrelated to shares or an employment The Dutch tax system (9)

  13. Partners are taxed on individual base. When you have a fiscal partner you can divide certain deductions. This way it’s possible to claim a higher tax return. Conditions Fiscal Partnership Married Unmarried but a cohabitation contract (civil-law notary) and both adults Unmarried but together a child Unmarried but registered as partners with a pension fund Unmarried but together owner of residential property Fiscal Partnership (1)

  14. Fiscal Partnership If you meet the conditions of Fiscal Partnership you are each other's fiscal partners (tax partner). This is not a choice. Fiscal Partnership (2)

  15. There are several tax credits (not all are mentioned). General tax credit € 1.987 Labour credit € 1.574 (higher 57 years or older) These are calculated through the net-income of the employer. Combination credit: max. € 1.871; al least 1 child younger then 12 years old and depends on the height of income. A non-working fiscal partner (or with low income) can claim the general tax credit, only if the partner pays at least the same amount of taxes (no more refund, than tax has been paid together). Tax credits

  16. There are “allowances” for Health care insurance (zorgtoeslag) Rent (huurtoeslag) Kids (kindsgebonden budget) Child care / day center (kinderopvangtoeslag) The height of an allowance depends on your taxable income, and the height of the rent/number of kids etc. www.toeslagen.nl Requests concerning 2011, apply before April 1st 2012 Allowances

  17. The 30% ruling is an expatruling for specific expertise that is scarce or absent on the Dutch job-market. The expatriate must be an employee who is hired from another country by an employer. The employer can, once granted, pay out a tax free allowance of 30% of the salary of the employee. This allowance will cover the extra territorial costs. The 30%-ruling is only on request applicable. The employer must reduce the gross salary to 70% and on top a tax free remuneration of 30% can be paid. It is not possible to claim the 30% ruling in your tax-return. 30% Ruling (1)

  18. Conditions for the 30% ruling (2012) - The employee is recruited from abroad; - The employee did not reside within 150 kilometres from the Dutch border at the time of hiring. - The employee's gross salary (inclusive of the tax free remuneration under the 30% ruling) is at least € 50.000 per annum; The maximum duration of the 30% ruling is eight years; Any period spent in the Netherlands over the last 25 years will be used to reduce the maximum duration of the 30% ruling. 30% Ruling (2)

  19. PHD graduates and masters graduates PHD and masters graduates who are hired within a year of completing their studies will benefit from a relaxation of rules: - The minimum salary requirement is € 38.007 gross (inclusive of the net remuneration under the 30% ruling (€ 26.605 younger than 30 years) - In the case of the PHD being completed in the Netherlands, the requirement of "being recruited from abroad" will not have to be met. PHD students can also opt for the 30% ruling (depending the research institution). Scientific researchers There will be no minimum required salary for scientific researchers who are employed by a university and/or a research institution that is subsidized by the government. 30% Ruling (3)

  20. Scarcity on the labour market in 2012 The requirement regarding scarcity on the labour market, which was an important criterion under the ruling valid until the end of 2011, will be deemed to be met if the minimum salary requirement is met. Check your labor agreement and/or contact Human Resources Universiteit Twente. 30% Ruling (4)

  21. Why should you declare a tax return? Interest on mortgage results in a pay-back off taxes Deductions results in a pay-back off taxes Immigration (i.c. with employment income) results in a pay-back (temporary social secured). Fiscal partner had no or a low income: refund off the tax-credit Tax return 2011 (1)

  22. When and how should you declare a tax return? When you receive a tax-form from “De Belastingdienst”: Always declare the tax-return! You received no tax-form: voluntary declaration is possible. When: before April 1st 2012: the refund will be paid before the July 1st 2012. No return or to late: penalties/fines are possible. How: Residents: tax return program “De Belastingdienst”, you need to have DigID. Non-residents: tax return program “non residents” (electronic signature). Immigrants: tax return on paper M-biljet (will be send to you by “De Belastingdienst”) Tax return 2011 (2)

  23. How should you declare your tax return? OR BE SMART: Contact Jongbloed Fiscaal Juristen N.V. Oldenzaalsestraat 125 7514 DP Enschede info@jongbloed.tv +31(0)53 432 72 00 Tax return 2011 (3)

  24. ? Jongbloed Fiscaal Juristen N.V. Oldenzaalsestraat 125 7514 DP Enschede info@jongbloed.tv +31 (0)53 432 72 00 Questions

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