Simplified guide to the annual tax return in the Netherlands
The Dutch Tax Office requires you to file your annual tax return each year. Previously, this was done through a letter in a blue envelope, but now you'll receive an online notification. Here's a concise overview of what the tax return entails:
Complexity of taxes:
Filing taxes and dealing with tax returns can be complex, and specific rules apply to individual cases. Seeking professional advice is recommended. You can find general tax information, applications, and forms on the Belastingdienst website, or explore tax guides for expats and a list of expat-friendly tax advisors on the I Am Expat website.
Tax partners:
Your tax partner's earnings are considered in your annual tax return. The concept of a tax partner is broad and includes not only spouses or registered partners but also individuals sharing a house or having children together.
Annual income tax return:
While your payroll tax is withheld from your salary, the annual income tax return is essential to reconcile withheld taxes with other factors, such as your mortgage, savings, investments, and potential tax deductions.
The deadline for submitting your annual income tax return is between March 1st and April 30th, unless you're granted an extension.
The box system:
The dutch tax system categorizes income into three "boxes," each with different tax rates:
- Box 1: covers income from salary, employment, freelance work, pensions, benefits, and more. Various deductions are available, such as home ownership costs, specific medical expenses, tuition fees, and more.
- Box 2: includes income from substantial interest in a limited company, taxed at a lower rate than box 1.
- Box 3: covers income from savings, investments, and other assets, taxed at a lower rate based on the value of the assets.
Certain assets are excluded from box 3, such as the property you live in and movable property like art or cars. Take a look at this website for more information about the box system.
Do you have questions on living in The Netherlands?
Taxes are crucial yet intricate, so don't hesitate to seek assistance from a Dutch tax officer.
Jasper van den Boogaard is specialist in expat-friendly tax services.