The bulbs are sprouting, winter is lifting and spirits are brightening: so, yes, it’s almost time for the Dutch tax office to send a blue envelope asking for your tax return.
Even if you don’t get a request from the Belastingdienst because you are an employee, it may be in your best interests to file a submission – and according to the experts, it is always a good idea to do this early.
You might get a refund because you are a home owner and are due a rebate on some of your mortgage interest repayments. You might have other refunds owing. And even if you have to pay, by doing things on time, you will avoid stress and paying 4% interest on any tax due for the 2022 financial year (which is the same as the calendar year).
Timing is key
You can submit your 2022 return, or aangifte, any time from the start of March. ‘If you file your tax by May, you get a refund before the summer holiday as they normally pay out in July,’ says an expert from tax adviser Blue Umbrella.
‘You can ask for an extension after May 1, but if you have to pay anything, the government can charge you 4% interest.’
Tax accountants will automatically file for an extension for you to spread their work through the year, and if you sign up to Blue Umbrella online for its personal tax filing service (for employees), it will do this free of charge.
What’s with the boxes?
The Dutch tax system distinguishes three types of income for tax purposes. These are referred to as box 1, 2 or 3, and they each have their own tax rates.
Box 1 covers taxable income from employment and home ownership, plus personal assets such as your car, caravan and artwork.
Box 2 includes taxable income from income you have from shares in companies in which you have a ‘substantial interest’ of at least 5%. Box 3, the Dutch ‘wealth tax’, taxes your income (or notional income) from savings and investments.
A tax break for internationals and Dutch people recruited from abroad, the 30% ruling, has changed recently. Since January 2019, this deduction to compensate costs of living in the Netherlands (30% of your salary tax-free) can be used for a maximum of five years instead of eight.
This year, some people’s 30% ruling will be coming to an end, which means a different tax situation.
‘You will now have to declare your global assets for “box 3” tax, which means all banks wherever they are located and property,’ says the Blue Umbrella adviser. ‘Property is taxed where it is located but if that is abroad, you still need to declare it here and then there is an exemption to avoid double taxation. All shares and cash needs to be declared here.’
The status of box 3 is currently in flux after a court ruling found that the Dutch state was unlawfully imposing a ‘fictional’ tax on savings which far exceeded factual gains. Until the law is formally revised, the tax office will assume shares made a capital gain of 5.53% and savings -0.01% in 2022. This notional gain is then taxed.
Tax can be more complex if you have moved during the year. If you moved home, be aware that some of the costs will be deductible from your income.
As well as your mortgage interest paid, you should declare costs like a financial adviser to gain a mortgage and official valuation of your new home.
‘If you refinanced and paid a penalty for doing this, the penalty is also tax deductible,’ said the Blue Umbrella expert. So if you got a low mortgage rate last year, you win on two fronts.
Moving to the Netherlands can also be tricky: you’ll need to register the date when you signed up at your municipality. If you have a part tax-year or left the Netherlands, you might need a different form. ‘There are a lot of misunderstandings around this,’ he added, ‘so ask your adviser.’
If you had support from the government, for example as a freelancer during Covid, and then paid it back, be aware. If you declare this to the tax office, it can be used to offset other gains.
‘You should declare this as it will probably count as a negative for tax purposes,’ said the Blue Umbrella expert.
Accountants are getting busy uploading returns, the software is ready to run, so avoid mistakes, seek professional advice and file early.
Blue Umbrella charges €149 for an employee’s tax report and €199 for a couple. Contact us here
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