Mr. Roel Kolder tax lawyer 02-03-2011 APROVE/AMC

1. Income taxes 2010 for PhD students Mr. Roel Kolder tax lawyer 02-03-2011 APROVE/AMC

2. The speaker of the day • Mr. Roel Kolder, tax lawyer. Has been working for the last 29 years at PwC, as a VAT(BTW) specialist. He is the father of two daughters (PhD-student, Psychologist) who he has helped for years with their income taxes and has therefore become an expert in this field.

3. Income taxes

4. Income taxes • The Dutch Tax Administration goes back (by law ) for 5 years • Therefore save everything yourself for 5 years! • And not just only on an external hard drive • Income taxes are withheld from your monthly paycheck • Income taxes is determined based on your total income of that year • Therefore, if you’ve worked for 6 months then too much income taxes is withheld from your paycheck. • All employers count!

5. Case: A PhD-student who directly starts working after receiving a Master’s degree • 1-10-07 started a PhD study. • Totally withheld income taxes over 2007 was € 1.400 • Subsequently filed for tax returns over the year 2009 • The tax return was done before april 1st 2008 • The total amount of € 1.400 euro’s was transfered (with interest) in June 2008

6. Tax return program • Go to www.belastingdienst.nl • Download the tax return program for the right year • Find your DigiD code of request a DigiD code at www.DigiD.nl • DigiD is your digital signature with the Dutch government • Keep all your receipts next to your PC! • In case of doubts you can fill in your tax return in the program but wait with sending it.

7. Tax return • You file your tax return from the previous year. • In 2011 you file your tax return from 2010. • New services: the online return form is partially filled in based on your previous tax return. • In 2010 it didn’t work properly, it was available very late and not a lot of information was filled in. • The experience in 2011? • Check if the correct information has been used.

8. Tax return • If you haven’t done your tax return in the past you can still do it for those years. • To do so, you need your old annual paycheck statements from your (former) employers. • If you had holiday jobs during university, they might have deducted too much taxes from your paycheck and you can ask for your money back. • The government usually gives this back, but it’s not enforceable.

9. Old tax returns (1) • Focus on health care costs • Additional health insurance was deductable • Home pharmacy was deductable • A person with glasses has a chronic illness and costs weredeductable • Also the cost of the glasses itself weredeductable • Specials diets weredeductable, etc. • In the tax returns programs supplementary information boxes are available

10. Old tax returns (2) • However, sometimes it is not clear whether something is deductable or not Tip : • Check it on the Belastingdienst-website • Check it in the “Belastingalmanak” from that year • And if possible, in the tax return program explain why you believe it should be tax deductable • The tax return is then filed correctly and corrections are possible.

11. Educational costs (2010) • Certain things are deductable above a certain threshold • The threshold for 2010 was € 500 per person • Who has bought that new PC??? • Look at it in all fairness and reason • If your employer compensated you for it, you can’t deduct it from your taxes! • No hobby studies! • Plan your educational costs! • Buy a new PC in January instead of December if you can’t declare it in December.

12. Educational costs • Educational books, literature • Tuition • Membership of a faculty association • 50% of your home internet subscription. The rest is private. • Write off expensive educational books. • Not the costs for decorating your working room • No costs for food and drinks • No travel and housing expenses

13. Case: The PC (1) • Buying a good PC that will only be used for your education/PhD studies. • After all, your old PC is just for emailing! • Remaining value is 10 % • Costs can be divided over 3 years • Paper and ink can be educational costs, but you use in the year that you bought it.

14. Case: The PC (2) • You bought the PC for € 599,- • TFT screen € 250,- • Printer € 130,- • Keyboard and mouse (wireless) € 100,- • In total € 1079 remaining value = 10 % • Yearly deductable: € 323,70(threshold 2010 is € 500,-) (€1079- €107,90=971,10 divided by 3) • In conclusion: you are better off buying that MacBook Air €1700-170/3= € 510  That puts you over the threshold!

15. Travel expenses • Employers usually make a financiel contribution to the work-travel expenses of their employees. This will be deducted from your travel expense that you can declare. • You have to travel at least 10 km. • 1 day or more, for at least 40 days a year. • Keep public transport receipts/declarations of costs • Usually there is nothing left to declare. • Just fill it in and the system tells you if your getting anything back.

16. Promotion costs • Printing/shipping your booklet including telephone costs/shipping, etc. • If the copy number is higher than the minimal requirement of the university then the additional costs are not tax deductable!!!

17. Promotion costs • If the price proposal from the printer for the first 50 copies that the AMC demands are let’s say € 2.000 • And you order 250 extra for only € 500 • Then the tax services could say that only 50/300 X € 2.500 = € 416,66 is tax deductable • If there is a separate bill for the additional 250 copies then the amount of € 2.000 is completely tax deductable! • In short, make good arrangements with your printer!

18. Promotion costs • Costs for renting the proper clothing, also for both paranymphs • Costs of the reception • Sometimes you can get a contribution from your employer/sponsor! • Not deductable are the costs of the promotion dinner • Not deductable are the costs of the photographer • For more tips also look at: www.promotiewijzer.nl/financien/belastingen

19. Donation • The financial donation parents can give their children (18-35 years) yearly, free from donation-taxes, is a maximum of € 5030 for 2010 • One higher donation is possible but many conditions apply to this and need to go through a notary. For 2010 this is € 24.144 or up till € 50.300 for purchasing a home, education or proffesional. • Be carefull to read all the conditions!

20. Donation • Why a donation instead of parents paying for some promotion costs? • Parents can’t declare any of these costs but the PhD-student can.

21. Being stationed abroad • Often alot of double costs • Employer could pay for the (extra-territorial) costs which is charged for taxes (See almanak 45.4.10) • Renting out your appartment temporarily could be benifical, there are 11 tax possibilities (See almanak 5.20.1) • Look closely at your insurances and your health care insurance in particular!

22. Buying your own house • Tip: do not buy a house in Amsterdam but on the country side in North-East Groningen • Good real-estate agent in a good market, fee usually is around 1.5 % of the purchasing price. • If a house is on the market for a while a lower fee might me negotiated! (€ 995-€ 1.500) • In Amsterdam a purchase contract has to go through a notary. • Perhaps in the future this will no longer be the case.

23. Buying your own house • Find a affordable notary for the transport act and mortgage act. • Lot’s of family who like wall-paper and painting etc. • External contractor, only 6 % VAT on labor costs. • If you need a lot of construction material, buy them ahead of time when they are on sale in the home improvement stores (20 %/15 %).

24. Buying your own house • With the “kosten koper (KK) ” (cost buyer) count on about 10% additional costs • With the “vrij op naam (VON) ” (free on name) you pay for the mortgage certificate and various provision costs, so in practice the costs are still rather high • Make a budget ahead of time • Take setbacks into account

25. Buying your own house • With an old house have the construction checked by an engineer. (Watch the CV!) • Costs around € 300 • At the VVE (Union of Owners) ask for the annual account to check if there are sufficient funds. • If there is a housing corporation in the VVE it’s usually a sign the finances are in order. • Watch out for the individual ground lease!

26. Buying your own house • Is NHG warranty recommended? Costs are deductable • Costs of the taxation rapport are deductable • Costs of the mortgage certificate and land registry are deductablen • Not deductable are the costs of the transport certificate! • Not deductable are the costs of the real estate agent! • In the appendix of the handout sheets there is a list of deductables according to the goverment.

27. Buying your own house • Costs fee real estate brokerage are deductable • Costs for fee of preparation and elongation fee are deductable • Costs bail-bonding provisionare deductable (yearly) • The costs of the monthly paid interest • Downside is the own housing forfait! • In politics the deduction of the mortgage-interest is being discussed!

28. Buying your own house • Special rules for monumental houses • Deductable are the monthly or yearly paid contributions to ground lease. • When you choose for a savings mortgage the saving amounts are not deductable • The contractual savings are taxfree (gross is net)! • So if your not planning of buying a house or getting married soon think about getting contractual savings (spaarloon).

29. Buying your own house • Biggest problem 2011 is securing financing from a bank. • A donation from parents (€ 50.300) could be a solution. • When borrowing money from (grand)parents, they should get a second mortgage for the amount. Exp. Purchasing a house € 200.000(VON), bank will only fund you € 150.000, grandparents want to help with the rest sum. • At a forced sale of the house it sells for € 175.000, The grandparents only get € 25.000 • This form of financing is risky for (grand)parents when a house isn’t worth enough.

30. Provisional tax returns • In buying the house you are faced with high costs which are for a part tax deductable • A tip is to hand in a provisional tax return on the day of transport of the house. • Personal experience: a return sent in on december 2nd 2009 and money was transferred on december 28th 2009

31. Living together and taxes • When living together with your partner and he/she hardly has any income it can be good to do a joint tax return. • Tip find another partner! • Are the taxes going to pay € 167,- each month? • Just try it! • The rules have changed again for this year!

32. The first child • The costs according to the CBS 19 % of the net income in total €100.000/€ 150.000 • Child benefits € 194,99 per 3-months • Child benefits depends on the combined income and number of children. • Look at www.nibud.nl • Very often the employer will also pay for part of the costs.

33. The first child • The cheapest child day care people are the grandparents! • If the parents are divorced, daycare for 7 days in the week is good and arranged quite cheap!

34. Averaging the income over 3 years • Threshold €545 • Taxable income from box 1 • Taxes without tax credit • IB tarifs see website www.belastingdienst.nl • Apply for averaging 6 weeks after receiving a final decision on your taxes. This usually arrives in october. • Case: following in the next slides

35. Averaging • 2007 € 6.179/ € 2.078 • 2008 € 24.811/ € 8.931 • 2009 € 30.018/ € 11.087 ---------------------------------------- • Total € 61.008/ € 22.096

36. Averaging

37. Averaging • Average income and owedtaxes. • Seeexcel file on. • www.aprove.nl ( € NUL) or • www.belastingmiddeling.nl (€ 14.50) • Total € 22.096 • Owed € 21.158 • To muchpaid € 938 min threshold of € 545 • € 393 paid back by the goverment.

38. Averaging • Beware of the pitfall! • The first € 17.319 is against 33,65 % taxes and the amount over that and the rest against 41,4 % of even 52 %. • Not for foreign taxpayers.