The Annual Tax Return in a nutshell

Expat Guide to the Dutch Housing Market

Each year the Dutch Tax Office invites you to file your annual tax return. This used to be through a letter delivered in a blue envelope, nowadays you’ll receive a notification online. In short, what this tax return entails.

Taxes and filing your tax return is a complicated business. To each individual case, specific rules apply. Make sure you get professional advice! Visit the website of the Belastingdienst for general tax information, applications and forms. Or check out the I Am Expat website for tax guides for expats and a list of expat-friendly tax advisors. We’ve collected need to know tax information for expats from these websites for you:

Annual income tax return

Even though your payroll tax is already withheld from your salary, the annual income tax return is necessary to counterbalance the withheld taxes with other factors such as your mortgage, additional savings, investments and potential tax deductions.

Unless you are granted an extension, your annual income tax return must be submitted between March 1st and April 30th.

The Netherlands grants highly skilled employees moving to the Netherlands a tax advantage: the so-called 30% ruling.

Read more about the 30% ruling!

The box system

The Dutch tax system divides your income in 3 categories, so-called ‘boxes’ to which different tax rates apply. This site gives you an overview plus tax rates and examples. A summary:

Box 1 covers income from salary and is taxed depending on your gross salary. In addition to wages from employment, box 1 also includes income from businesses, from work as a freelancer, income from pensions or benefits, gratuities and foreign income.

In Box 1 you can deduct several factors, such as costs of home ownership, expenditure on income, alimony and other maintenance obligations, specific medical expenses, temporary stay at home for the severely disabled, tuition costs and study expenses, maintenance of a heritage listed building, waived venture capital.

Box 2 covers income from a substantial interest in a limited company, taxed at a lower rate than box 1. This includes regular benefits such as dividends and capital gains.

Box 3 covers income from savings, investments and other assets and is taxed at a lower rate still, depending on the value of the assets.

The value of your assets is calculated every January 1st by adding all assets and deducting all debts. However, there is such a thing as tax-free capital (heffingsvrij vermogen). The maximum amount of tax-free capital is defined yearly for individuals, couples and people above retirement age.

Included are stocks and shares, bank and saving accounts, a second home or investment property, endowment insurance policy. Excluded are the property you live in, moveable property such as art or cars, certain kinds of insurance and investments in forests, nature or certain startups, for example ethical or cultural projects.

Tax partners

The earnings of your tax partner will be taken into account in your annual tax return. The Dutch Tax Office takes a broad view on the concept of tax partner: in addition to your spouse or your partner with whom you hold a registered partnership, it may also be the person with whom you share a house or with whom you have children.

Penalties

If you do not declare your income, you’ll be fined. This applies to income from salary but also income from wealth or income which you’ve received through an inheritance.

Taxes are just as complicated as they’re important. So if you need help, contact a Dutch tax officer. Find an overview of expat-friendly tax services on this website.

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