Over the next few weeks, blue envelopes will start dropping through tens of thousands of letterboxes all over the country. It’s that time of year again – time to file your Dutch tax return.
The Dutch tax year runs from January 1 to December 31 and in early February, the tax office starts gearing up for the rush. The deadline for submissions – which is always included on the form – is April 1.
The tax office – Belastingdienst – has made great strides in recent years towards making the process more simple. As the organisation says on its own website: ‘Paying taxes is a part of life. The Tax and Customs Administration aims to make things as easy as possible for taxpayers.’
If you have lived in the Netherlands for the full year and have a job, but no other complicating factors – like the 30% ruling – you may not even get a blue envelope. That means the tax office considers your situation to be simple, and that your employer has got it right on your jaaropgave – the annual summary of your earnings.
If you do get a blue envelope and decide to file your own return via www.belastingdienst.nl, you have to do it electronically, and for that you need a Digid – a code which operates as an effective digital signature. If you don’t have one – and they are needed for all sorts of communication with the the authorities – you can apply for one at www.digid.nl.
But if your personal situation includes complications, then it is always worth taking to a tax advisor to make sure you are getting the most out of your money. Some childcare costs, for example, are tax deductible. If you have income from freelance activities, you have to declare that as well.
If you are self-employed ( a ZZP’er), or run a small company, it is always worth having an expert make sure you have made the most of all the deductions open to you – such as a special tax break for starters.
The situation can be particularly complicated if you have tax obligations elsewhere – if you are a American citizen, for example. Some tax advisors, such as Orange Tax, specialise in dealing with these sorts of situations.
If you own a house, the interest you pay on your mortgage is fully tax deductible over 2012, but that will change in 2013. You will also have to pay something called the eigenwoningforfait – this is a fictitious income which home owners are said to benefit from, and are taxed on as if it was real money. It’s an extra tax which can seem very unfair to people who are new to the Netherlands, but nevertheless, it is one which has to be paid.
If you’ve had your mortgage-related tax rebate in advance, you will also have to fill in a tax return so officials can check you had the right amount.
The Netherlands also operates an asset tax – a tax on assets such as savings and investments – which assumes a 4% return, whatever the reality. This is another pitfall awaiting the unwary taxpayer. You also have to pay tax on any corporate investments.
The tax office is trying to keep it simple. They’ve divided up income tax into three boxes: Box 1 which covers tax paid via your job with a top rate of 52%; box 2 which includes a flat tax on shareholdings; and box 3; which is a flat tax on your savings and investments – in other words, everything that does not fall under box 1 and box 2.
Yet even that may not be as simple as it sounds – the division between box 2 and box 3 can be blurred as well.
But never fear. You’ve got until April 1 to get it all sorted out. And there are tax experts, such as the team at Orange Tax, on hand, who specialise in helping confused foreigners confronted by the incomprehensible contents of a blue envelope.