Dutch Income Tax – Residency

Almost all countries base their taxation system on residency. In short this means residents will be taxed for their worldwide income, while non-residents are taxed only for their source income. Therefore you can say that residency is the most important thing to pay attention to.

The Netherlands also has a tax system based on residency. Residency for individuals in The Netherlands is based on facts and circumstances. This means the registration itself is not decisive, but the factual situation will be examined. For the factual situation the following will be checked:

  • In which country do you have your factual place of residency (rented or owned)?
  • In which country are your financial ties the closest?
  • In which country are your personal ties the closest?

As mentioned above registration itself is not decisive, it can be an indication of the factual situation. Therefore always consult a tax advisor if you plan to (de-)register yourself. It can save you (or cost you) a lot!

Residency is also very important for the 30% ruling.

The Deadline to file your Income Tax Return 2016 expires in:

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Don’t want to wait any longer? Contact us now!

NEW: Calculate your income tax refund 2016.

Taxable Income

After determining if you are a resident or a non-resident, you will only be taxed if you have taxable income. There are three categories of taxable income in the Dutch Income Tax system:

  • Box 1: Work and primary residence
  • Box 2: Substantial interest
  • Box 3: Savings and investments

Each box has their own tax rates.

Tax Deductions lower your Taxable Income while Tax Credits immediately lower the amount payable. Having deductions or special tax credits can be a reason to file a tax return. We listed several deductions and tax credits that you could have.

Tax Rates 2016 and 2017

Lower Threshold (€) Upper Threshold (€) Income Tax (%) Social Security Tax (%) Total Tax Rate (%)
19,922 8.40% 28.15 36.55%
19,922 33,715 12.25% 28.15 40.40%
33,715 66,421 40.40% 40.40%
66,421 52.00% 52.00%
Lower Threshold (€) Upper Threshold (€) Income Tax (%) Social Security Tax (%) Total Tax Rate (%)
19,922 8.40% 28.15 36.55%
19,922 33,715 12.25% 28.15 40.40%
33,715 66,421 40.40% 40.40%
66,421 52.00% 52.00%
The taxable income in both 2016 and 2017 is taxed against a rate of 25%.
The value of your assets at January 1, 2016 will be multiplied by a fictive yield of 4%. This will be taxed against a tax rate of 30%.
The fictive yield of 4% of 2016 and previous years has been replaced by a fictive yield according to the below table. The tax rate remains 30%.

Taxable Assets

Lower Threshold (€)

Taxable Assets

Upper Threshold (€)

Percentage

1.63%

Percentage

5.39%

75.000 67% 33%
75.000 975.000 21% 79%
975.000 0% 100%
The tax authorities use the following example:

You are a resident taxpayer, don’t have the 30% ruling, are single and have assets with a value of 125.000.

Step 1 – Calculate Taxable Assets: Taxable is 125.000 minus 25.000 of non-taxable assets = 100.000

Step 2 – Bracket 1:

This 100.000 exceeds the amount of 75.000 in bracket 1. This means 75.000 will be taken into account for 67% against a yield of 1.63% = 819. The remaining 33% of these 75.000 will be taken into account against a yield of 5.39%. That is 1.334.

Step 3 – Bracket 2:

The remaining 25.000 (100.000 minus 75.000) will be taken into account in bracket 2 for 21% against a yield of 1.63% = 85. The other 79% will be taken into account against a yield of 5.39%. That is 1.064.

Step 3 – Calculate your Taxable Income in Box 3:

Bracket 1 and 2 advantages are 819 + 1.334 + 85 + 1.064 = 3.302 Taxable Income.

Step 4 – Tax Box 3:

Taxable Income 3.302 is taxed against a tax rate of 30%. The tax in box 3 is 991.

  • Having your own property and paying for mortgage interest;
  • Not living or working in The Netherlands for the entire year;
  • Having a child below the age of 12;
  • Donations to Public Benefit Organizations, the so-called ANBI-institutions. You can check if you donated to an ANBI-institution here;
  • You have a Tax Partner with no (or a very low) income;
  • You have a lot of Health Expenses.

Filing Your Tax Return

The first reason is that if you have been ‘invited’ by the tax authorities, you have to file a tax return. Not filing a tax return after an invitation can result in an estimated assessment. You do not want that to happen.

If you have not been invited, filing a migration tax return could  be a reason to get a refund of the too much withheld payroll tax and social security contributions.

Another reason is that you may have some deductions or special tax credits that will give you a refund. We have listed them on this page.

When you move to or leave The Netherlands and file your tax return, you will file a migration tax return. If you only have employment income, there’s a very good chance you will not be invited by the tax authorities to file a tax return for your migration year because the payroll tax will be considered the end station. Even with only employment and no other deductions or special tax credits it might be worth to file a tax return for this year since in general this results in a refund.

Please contact us if you want us to check if you are eligible for a refund. We will check this free of charge.

Filing a tax return in the Dutch Income tax is  based on the individual. Nevertheless it is possible to have a tax partner in the income tax. With a tax partner you can allocate several elements that are considered mutual, like the house you bought and your bank accounts and other assets in box 3. People with mutual income or deductions therefore sometimes speak of filing a ‘jointly return’. Formally two separate income tax returns are being filed and not one, but they refer to this. We can assist you in filing both income tax returns, where we only charge a small additional fixed fee to prepare the tax return of your tax partner.
For a regular income tax return of the previous year the deadline is May 1. If the return is being filed before April 1, the tax authorities guarantee an assessment before July 1. Should you require additional time to file your tax return, individuals can call the tax authorities to get a few more months extension. As tax advisors with a BECON-number, we can get you an even longer extension. If you want us to file your tax return with extension, please contact us.

For tax returns you have not been invited to do, like most migration tax returns, you have a maximum of 5 years to file your return. This means in 2017 you can still file a tax return of 2012.

File Your Dutch Tax Return Now!