2016 Dutch income tax return: 6 frequently asked questions
It is that time of the year again. The 2016 calendar year has come to an end, and even though you may have celebrated its end with champagne, it is still time to wrap up your tax affairs for 2016. [Contributed by TaxDirect]
We call it the 2016 Dutch tax return season!
1. When do I need to file a tax return in the Netherlands?
There are two situations in which you must file a Dutch tax return:
If you are invited to do so
You may get a letter from the Dutch tax authorities requesting you to file a Dutch income tax return for 2016. This letter will be sent via regular mail in the famous blue envelope. Taxpayers with a DigiD and MijnOverheid account will also receive a notification in their electronic message box (berichtenbox).
When you have received a blue envelope, you must file a tax return in the Netherlands—even if there is no income to report, and no tax payable.
If you owe the tax authorities money
If you don't get a letter, you still need to file a tax return if you owe the tax authorities more than EUR 45. In that case, you have an obligation to file a tax return in the Netherlands. You may owe money, for example, if you have Savings and Investments (Box 3) above the threshold, if you have income from other activities, or if the wage tax withholdings made by your employer were insufficient.
If you are not sure if you owe money and whether you should file a tax return, prepare a full tax return to validate it. This way, you limit your exposure and risk for penalties and interest. If you only have employment income, you may use the TaxDirect free Dutch tax calculator to get an indication of the amount due.
If you have not received a blue envelope and you owe the Dutch tax authorities EUR 45 or less, there is no obligation to submit a tax return.
Bonus: file it when you expect money back!
There is a situation in which you don't have an obligation to file a Dutch income tax return, but it is actually smart to file one: namely, if you expect to receive a refund, e.g. if you have certain tax deductions or if the wage tax withheld is higher than the income tax payable.
This may be possible if you only started or ended your employment activities during the year. A final, and often missed, opportunity is if none of the above applies and you wish to average out your income over three years, called middeling in Dutch. You would require a final tax assessment to do so. Averaging income may be appropriate if there are significant fluctuations of taxable Box 1 income over those three years.
Again, if you only received employment income, you may use the free tax calculator to get an indication of a refund. Note that refunds under EUR 15 will not be paid out!
2. What is the deadline for filing my Dutch tax return?
The official deadline is 1 April, but the deadline to file 2016 Dutch income taxes has been extended until 1 May 2017. In some cases, extending the filing deadline may be possible. Generally, registered tax advisors can obtain extension for their client portfolio.
If you file your tax return before 5 April, the Dutch tax authorities guarantee that they will issue a preliminary assessment before 1 July 2017. This way, you are guaranteed to receive your refund swiftly, or, in case you need to pay an additional amount, you may avoid paying interest.
If you file your Dutch income tax return after 5 April, interest may be due. If you file it after the deadline of 1 May, you may owe penalties.
How can I file a tax return?
You can file taxes either electronically or by filing a paper version, though the tax authorities will assume it will be done electronically. If you want to file a paper tax return, you need to request one by calling the BelastingTelefoon (0800 0543). If you are an entrepreneur, you will not have the option to file a paper version; filing an electronic tax return is mandatory.
When you file your tax return electronically, you can use the software of the Dutch tax authorities. If you hire a tax advisor, they will usually work with their own customised (SAAS) software. Besides helping them to manage their processes and deliver a smooth service, this allows for some more flexibility to take into account the specific situation of the client. The software of the Dutch tax authorities is sophisticated, but is one-size-fits-all and offers little flexibility.
When can I file a tax return?
Filing tax returns is possible as of 1 March 2017.
What type of tax return do I file?
There are of number of different tax forms, each with a specific purpose. The most common are:
- P: Normal full-year residents
- C: Non-residents
- M: Part-year residents (immigration and migration)
- O: Entrepreneurs
You should use the form that suits your situation. Note that if you received a blue envelope, you should, in principle, file the return noted on the invitation. If this form is incorrect, you must request a change of form (which must be administered in the tax system’s back-end) before filing the correct form. Otherwise, your tax return will be rejected.
What information do I need for my tax return?
This, of course, depends on your personal situation. Refer to this handy Dutch income tax checklist to determine what you need.
We wish you a happy tax return season!
Contributed by TaxDirect
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