Filing your Dutch tax return: 10 things you need to know

J.C. Suurmond & zn. are Dutch tax consultants with an international perspective and have been providing tax solutions for expats and businesses in the Netherlands since 1986.

Despite the Dutch Tax Authorities' slogan "We cannot make it nicer, but we can make it easier", even Dutch people often struggle with their tax return.

As the May 1 deadline approaches, many people start to get nervous about filing their tax return. For expats - who have to do their tax in a new system and language - the Dutch tax return can seem even more complicated!

Tax and expats

Actually the Dutch tax system is nicer for expats than for Dutch people! You'd be surprised to learn about the refund possibilities you have as an expat in the Netherlands.

The challenge is to know how to make use of such advantages and to find the best opportunities for claiming tax refunds.

Dutch tax: 10 things you need to know

Here are 10 aspects of the Dutch tax system that expats should be aware of, to take advantage of the benefits and to know the basic rules:

1. Check if you need to submit a tax return

If the tax authorities want you to do a tax return they will send you a notification. If your financial affairs are simple then you may not receive one as the return may not be necessary.

However, if you don't submit a return then you might be paying too much tax, for example, if you only worked part of the year or if you have deductible expenses such as study costs. In this case it can be profitable for you to file a return so you can claim tax back.

It's important to note that you can always request to file a tax return - even if you haven't received a notification.

2. Remember the tax deadline

The deadline for submitting your 2015 tax return is May 1, 2016, so you must submit your return on or before April 30. You can apply for an extension if necessary, but you must do this before May 1.

3. Register with a Dutch city council

If you are living in the Netherlands for a longer period, more than six months for example, you must register with the city council of your place of residence. This makes you a domestic tax payer.

In the year that you arrive you will have to file a special tax form; it’s more complicated but gives you more opportunities for a refund.

4. Deregistration is also important

Often forgotten but equally important is deregistration with the city council when you move out of the Netherlands.

If you do not deregister, the tax authorities will continue to view you as a domestic tax payer, and tax you as such. When deregistering you will need to supply a foreign address.

5. Changes for non-domestic tax payers

There have been recent changes for non-domestic tax payers, or people who live abroad but earn income in the Netherlands.

From 2016 you can only opt for full domestic taxation in your tax return if your Dutch income is more than 90 percent of your total income.

6. Declaring (foreign) assets

When you are a domestic tax payer in the Netherlands and the 30% ruling does not apply to you, you are obligated to declare assets, such as shares, savings, and properties, if their value is above the tax-free threshold. This includes foreign assets.

In 2015 the threshold is 21.000 euros per person, and in 2016 it is 24.437 euros, or double for fiscal partners. The Dutch Tax authority can become rather unpleasant when it comes to undeclared assets and actively takes part in the international combat against tax avoidance.

› Assets and the 30% ruling

If you are a non-domestic tax payer (C-form) or if the 30% ruling applies, you can opt for partial non-domestic taxation which does not require you to state your Dutch or other assets, apart from Dutch real estate.

› Assets and domestic tax payers

If you are a domestic tax payer without the 30% ruling and have not yet declared your foreign assets (if their value is above the threshold) we strongly recommend that you check if your Dutch or foreign assets, bank account, real estate, shares etc. exceed the threshold.

7. Penalties for undeclared assets

If someone is caught with undeclared assets, the fine can be up to 300 percent, plus interest due over the past 12 years.

The Dutch government does give persons with undeclared assets the opportunity to put things right on their own initiative. This is called the amnesty ruling in which a fine of 60 percent applies in addition to the tax which is due. For the most recent two years no fine is due.

If the Tax Authorities notice that you have undeclared foreign bank accounts then you cannot make use of the amnesty ruling anymore.

8. Taxes on savings

As mentioned earlier, the tax free amount for savings was 21.000 euros per person in 2015 for domestic tax payers.

Currently the Box 3 tax levy is 30 percent charged on a notional return of 4 percent, which means that the effective tax rate on assets such as savings is 1,2 percent.

With the Netherlands' current low interest rates this is a topic of debate. If you want to know more about wealth tax changes and also the increased exemption in gift tax you can read this article.

9. Taxation on real estate

If you own a house in the Netherlands which counts as your first residency, you can repay the mortgage in Box 1. This means you can avoid the property being taxed as an asset in Box 3.

For foreign real estate you should request "double taxation deduction".

10. Tax deduction on your mortgage interest

If you are living here for a longer period, buying a house is often more favourable then renting. The mortgage on your primary residence, as well as mortgage-related expenses, is still fully tax deductible.

Also, the interest rate for mortgages in the Netherlands is currently at its lowest, which can make your monthly expenses even lower. If you move out of the country you can rent out the house, sell it, or keep it for "own use".

If you keep your property for own use, in some circumstances it can remain in Box 1, with mortgage interest deduction. In case you sell the property, there is no capital gains tax.

Take control of your taxes! 

It is worthwhile to investigate the best approach to filing your Dutch tax return in the Netherlands. If you are unsure what to do then it is wise to consult a trustworthy tax advisor. Usually this will save you time, money and worry!
 

Lennart Suurmond is a tax advisor at J.C. Suurmond & zn. Need advice on the best way to file your 2015 tax return? Fill out the form below!