Filing your Dutch tax returns the smart way

Filing your 2017 Dutch tax return the smart way

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With the Dutch tax return deadline coming up on 1 May, it’s a good idea to brush up on the past and coming years’ changes to the tax code.

With new tax rules in effect and even more looming in 2019, expat tax expert Lennart Suurmond of JC Suurmond Tax consultants shares his top tips for getting your affairs in order.

2019: a new Dutch tax system

In 2019, a new tax system is set to be brought in by the Dutch government. This could have a significant effect on the rate of tax you pay, as well as any rebates or deductions you’re entitled to. While you won’t feel the effects of some of these changes for a while, it can help to get ahead of the game.

 

How to submit your Dutch tax return

In theory, you can submit your tax return any time from 1 Match until 1 May – though it is possible to request an extension at any time before this date. Usually, if you request an extension to file your tax return you’ll be given until 1 September, and tax advisers can request more time on top of this.

Lennart Suurmond says that “if you’re not sure whether you need to file a tax return, it’s worth checking, as there are ways you might be able to benefit from the tax system. It’s also possible to file tax returns retroactively for up to five years”.

Reduction in Netherlands income tax brackets

As it stands, income tax in the Netherlands has four brackets, with a highest rate of 52% – though this is set to change as early as 2019. Instead, two brackets of 36.93% and 49.5% will be brought in, with the top bracket applying to people making more than around €68,000.

It’s not yet clear how social security contributions and other deductions will be calculated under the new rules. It may be that the government brings in a separate bracket for such premiums” adds Lennart.

Changes to Dutch wealth tax from 2017

Box 3 tax in the Netherlands tax form is essentially a wealth tax. Previously, this was applied at a flat rate of 30% in effect resulting in a 1.2% tax on your overall net wealth.

This has changed to a bracket system for 2017, which will aid anyone who has assets of less than around €200,000. The tax brackets will now be:

  • 0.861% - assets between €25,000 and €100,000
  • 1.38% - assets between €100,000 and €1 million
  • 1.617% - assets exceeding €1million

30% ruling reduced from eight to five years

The prospect of decreasing the period of the 30% ruling from eight years to five is currently under consideration, but it’s not yet clear if changes will definitely come into effect.

Lennart says: “Remember to think about how the 30% ruling affects your assets. For example, if your partner makes use of it, you’ll only need to declare your Dutch real estate assets. Should the ruling come to an end, however, you’ll have to declare any foreign assets, too. Keep on top of your tax responsibilities and remember that if you own foreign property, you could request a double deduction in taxation”.

Further reduction in mortgage interest deduction

The mortgage interest deduction will decrease by 3% a year until it reaches the proposed new tax rate band of 36.93%. This year, you can deduct your mortgage at a maximum rate of 50%, if this calculation takes place in the fourth bracket of taxation (incomes above €67,000).

Upcoming changes to Dutch corporate tax

If you pay corporate tax on your companies, the current rates of 20% and 25% will drop to 16% and 21%. The box 2 rate, however, which applies when you remove money from your business, will rise from 25% to 28.5% over the next three years.

“While these changes will be phased in over time, they should make the Netherlands more attractive to foreign companies considering moving over here” says Lennart.


 

 

Lennart Suurmond completed several fiscal studies and joined J.C. Suurmond Tax consultants in 2003. J.C. Suurmond was established in 1986 by his father and the company’s focus has always been on service and results. Tax advice, tax returns, international income and assets, advice re immigration are the main fields where Lennart has experience.

 

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