March is upon us, so you can file your income tax return for 2021
Unlike last year, when there was a week long delay due to system malfunction, the Dutch tax office is back to normal deadlines and – unless you ask for an extension before May 1 – your return is probably due by May 1 2022.
‘It’s a good idea to collect documents together before starting to file your taxes,’ says a spokesperson from Blue Umbrella tax adviser, which advises hundreds of expats, freelancers and small business owners.
Even if you are in regular employment, it might be wise to file your documents so that you qualify for tax perks, for example, on owning your own home or if you have savings liabilities that you need to declare.
Your employer, if you have one, will issue you with an annual income statement or the so-called jaaropgaaf. This lists the year, your salary, the amount of tax already withheld at source, and any perks that you received which have not been taxed, such as a travel allowance.
If you have bank accounts in the Netherlands, these will also issue an annual income statement, which you can normally find and download yourself. You might also need registration documents for goods you own or bought, a 30% ruling statement if you receive this tax perk, and details of healthcare costs that were not reimbursed by your health insurance (because you may be able to deduct some of these from your income).
Any gifts or donations that you made should also be declared, plus statements for investments that you have or shares – although bear in mind that if you have the 30% ruling, your worldwide wealth will not be taxed in the Netherlands as you are considered partially non-resident.
There are various tax changes that you should consider. For 2021, you can still deduct certain study costs from your income (or set them forward against future income) but from January 1 2022, this benefit has been replaced by a subsidy called the STAP. Each year, under this plan, you can apply for a maximum of €1,000 for education and development courses which improve your employability. There is a register of accredited courses and you need to request the budget via the UWV employee insurance agency.
The European Union has criticised a tax break in the Netherlands that has for years meant that homeowners have been able to deduct some of the interest they pay to banks for their mortgage, from their income tax. For a number of years, the popular tax has been slowly reduced and for 2021 you can declare a maximum of 43% of this cost – which can be refunded to you on a monthly basis or at the end of the year.
Another benefit known as the combined income related tax credit (inkomensafhankelijke combinatiekorting – the snappy Dutch name) for parents of young children is gradually being lowered and will eventually be abolished.
For the tax years ahead, the new coalition government intends to abolish a controversial childcare benefit scheme, replacing it with largely or fully-funded childcare for working parents.
Currently, it is not clear how savings and wealth (not including the house you live in) will be taxed for 2021 onwards after a court ruling that said a ‘fictional’ rate of tax that the Dutch government has been imposing is in fact illegal. The government has said reforming this tax is an ‘enormous’ task.
An option to ‘average’ your income over a period of three years, which might be to your benefit if you have variable income or bonuses, will disappear in 2023, so you might want to consider using this for last year or this one. For the 2022 year, the basic tax rate will drop to 37.07% and the top rate will remain 49.5% for incomes above €69,398.
‘Take advice from a tax adviser if you are unsure of your current situation or have any queries regarding your taxes in the past,’ said the Blue Umbrella spokesperson. ‘As with every country, the Dutch tax system can be complex, and by properly understanding it you can avoid penalties and make the most of statutory tax benefits.’
For more advice and help with your personal tax situation, contact Blue Umbrella.
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