Expat tax alert Q&A 2020: Dutch personal income tax return

1. When am I required to file a Dutch tax return?

You are obliged to file a tax return: (a) if you get a letter from the Dutch tax authorities or (b) if you have to pay (an additional amount of) tax on your tax return. The latter generally applies if you have sources of income that have not already been reported through a payroll. This also applies to Dutch non-residents who own a property in the Netherlands (e.g. for rent, AirBnB). The tax letter, inviting you to file a tax return, typically arrives in the mail in February or March. If you are not required to file a return, you can also voluntarily file a return.

2. What is the filing deadline for the 2020 Dutch tax return? Can I get an extension?

The deadline is 8 May 2021 for full year residents of the Netherlands. For non-residents and tax payers who migrated during 2020, different deadlines apply. When you file through Mazars a filing extension of up to 12 months applies. You can also apply for a filing extension yourself, which is typically granted until 1 September 2021.

3. How do I file a Dutch personal income tax return?

You can file a Dutch tax return yourself or you can ask a tax adviser (Mazars for example) to do it for you. You can file a Dutch tax return via the website of the Dutch tax authorities. You do need a DigiD, which is your personal access key. You cannot file a tax return if you do not have a Dutch tax number (Burgerservicenummer or BSN). If you need help, feel free to contact us.

4. I moved to the Netherlands in 2020, do I need to file a Dutch tax return? Anything important I need to know?

Normally you can wait until you’re invited to file a return by the Dutch tax authorities, but this letter may come a bit later in 2021 (or in some cases not). When you establish residency in the Netherlands during the year, in fact you have been resident in 2 or more countries in a year. It is important to carefully record the day you actually moved to the Netherlands, as in most countries you are tax liable for your worldwide income. Income taxable in another country is generally tax exempted in the Netherlands under the applicable tax treaty (if a tax treaty is concluded with the Netherlands). Watch out for trailing payments (i.e. salary, bonus, stock options), which relate to work performed in your former country of residence and which are paid during your Dutch residence period!

5. I’m not invited to file a return. Should I file a Dutch tax return nevertheless to get a tax rebate?

Yes, it’s definitely worth considering as in many instances you may be entitled to a tax rebate. Some example situations: you migrated to/from the Netherlands during the year, you paid mortgage interest in relation to your primary residence, you worked only part of the year. There are also other types of tax deductions available, for instance for study expenses, life insurance policy, gifts or medical expenses. If you earned employment income and you have a qualifying tax partner who did not work, your partner can also claim the payout of the general tax credit, so it’s worth checking the conditions.

6. I am required to file a Dutch tax return. What happens if I don’t file on time?

If you don’t file your Dutch personal income tax return on time, you can get a penalty of 385 euro. The penalty can go up to 5.514 euro in case of consecutive failure to file on time. Typically, if you’re past the deadline, first you will receive a reminder. Higher penalties apply if you willingly file an incorrect or incomplete tax return.

7. I have a 30%-ruling. How does this affect my Dutch tax filing?

If you are eligible for the 30%-ruling, you can opt for partial taxation status. This means that you are taxable in the Netherlands only for your employment income , major shareholdings in Netherlands based companies (>5%) and properties based in the Netherlands (e.g. second house, holiday home). You are not tax liable for your assets in so-called box 3 (i.e. balance of your bank accounts, savings accounts, stock portfolio,  etc). For US nationals who are eligible for the 30%-ruling a further limitation of Dutch taxable employment income applies, for work carried out outside of the Netherlands.

8. Does Covid-19 impact my tax filing?

Yes, Covid-19 will likely have an impact on your tax liability, if Covid-19 affected your international work pattern. This also affects people working from home, working remotely, working from anywhere. For example you are a resident of the Netherlands and before Covid-19 you worked 50% of the time in the UK and 50% in the Netherlands. Your actual work pattern for 2020 appears to be 10% in the UK and 90% in the Netherlands. During 2020, your salary was taxed in the UK and the Netherlands via payroll 50-50 (salary split), and it was not amended during 2020. This means that you will have an amount payable on your Dutch tax return, while you can claim a tax refund via your UK tax return. Although this will not lead to double taxation, it may affect your total net income , and eventually your cash flow. Note: an exception may apply for cross-border situations between Netherlands and Belgium and Netherlands and Germany.

9. Due to Covid-19, is there any tax relief available for expats?

The Netherlands have entered into an agreement with both Belgium and Germany to mitigate the negative effect of a changed work pattern due to Covid-19. 

In a nutshell, employees who had an existing cross border working pattern between Netherlands and Belgium before Covid-19 (i.e. mid March 2020), are allowed to continue with his or her working pattern through the Covid-19 crisis. As a consequence, their tax position remains unaffected. However, this is not mandatory, you may also apply your actual work pattern for the assessment of your tax liability. You can do this in your tax return. For social security a similar relief is available, whereas the pre-Covid-19 existing social security position should not be affected by a change in work pattern (working from home). This relief applies to situations governed by EU Decree 883/04, where typically an A1 is in place.

10. I have a house in the Netherlands, can I get a tax deduction? And can I deduct the costs of the international school of my children in my Dutch tax return?

The most common tax deduction applies to the mortgage interest paid for your primary residence (‘eigen woning’). All the mortgage related interest and costs paid in a year can be deducted from your taxable income. Note that the rate at which the deduction is available is reduced every year, from 43% in 2021, 40% in 2022 and 37,1% from 2023 onwards. On the backside of this, the primary residence represents taxable income, which is determined based on a predetermined percentage of the house value (‘WOZ-waarde’). This deemed taxable income (‘eigenwoning forfait’) is added to your taxable income. The facility is only available for your primary residence, typically the address where you are registered as an inhabitant.

There is no tax deduction for international school fees The only possibility to get some compensation is for your employer to reimburse these costs, even if you have the 30%-ruling. If you’re interested to know more about the 30%-ruling or compensation of extraterritorial costs, feel free to contact us.