Read this tax guide by J.C. Suurmond & zn. to make sure you are up to date and know how to gain maximum tax benefits!
Circumstances can be hard if you are an expat, living in a foreign country where different, unknown rules apply. Your tax situation, for example, can prove to be a great deal more complicated than you would have expected. With the high inflation rates and new cabinet, it is worth the extra effort to be on top of your tax situation.
Did your 30% ruling end in 2021?
Did your 30% ruling end in 2021? You are now regularly taxable in the Netherlands, also for your worldwide assets (Box 3 tax), so don’t forget to declare these in your tax return! Although, due to the recent High Court decision on Box 3, the tax authorities have confirmed that no Box 3 tax assessments will be raised for the time being.
Box 3 tax developments
The Dutch Supreme Court states that the fixed calculation of the Box 3 tax is disproportionately substantial from 2017 onwards, and that it is therefore in violation of the European Convention for the Protection of Human Rights (ECHR). The Tax Authorities have granted all mass appeal proceedings against the Box 3 tax for 2017 to 2020.
It is not yet known how the tax will be calculated in the new situation. There is also nothing known about possible compensation for other taxpayers who have paid too much Box 3 levy. Urgent legislation is currently being worked onwhich should provide a solutionuntil there is a new Box 3 levy based on actual return.
Because of these uncertain developments, it may be wise to wait before taking any action with regards to saving on Box 3 taxation until there is more clarity as to how this tax will work out. In general, the tax advice to minimise Box 3 tax is to make sure the amount is as low as possible on the reference date for taxed Box 3 assets, which is January 1. A few ways to achieve this are:
- The setting up of an OFGR or BV to save Box 3 tax
- Paying off part of the mortgage on the primary residence (Box 1)
- Making a (tax-free) gift to a relative or non-relative that will be used for the purchase of a home that is or will be a primary residence
- Depositing money into an annuity
A qualified tax advisor can inform you about Box 3 developments and advise you on actions that are possible in your situation.
Request a provisional assessment on time
Do you expect to pay tax for the 2021 or 2022 tax year? If you request a provisional assessment in time, you can save on tax interest. You need to request the provisional assessment six months after the end of the calendar year (July 1, 2022). After that, you will pay tax interest of at least 4 percent. To ensure that the assessment is imposed in time, we recommend that you apply for it before April 1, 2022. The assessment for the 2021 tax year must be paid at once. You may pay the 2022 tax year assessment in instalments.
Work from home allowance
With more people working (partly) from home, as of January 1, 2022, the cabinet has introduced a tax-free home working allowance of a maximum of 2 euros per day. This is meant to cover general costs like gas, electricity, water and, not to forget, coffee and toilet paper. On the other hand, travel compensation remains 0,19 euros per kilometre, which hardly covers the higher gas prices.
Replacement deduction for study costs
From the tax year 2022 onward, study costs are no longer deductible from your income tax. The tax deduction will be replaced by a STAP (Stimulation of the Labour Market Position) budget of a maximum of 1.000 euros, which people may use for education to remain employable in the labour market. The good news is, however, that you can still deduct your study costs for 2021 till five years back.
Changes in primary residence scheme
Did you buy a house together with your partner, but previously bought a house yourself (and sold it with equity)? Before, this could lead to unintended restrictions in marriage and partnership. Sometimes, this would mean that less mortgage interest could be deducted. These restrictions will be removed by adjusting the owner-occupied home scheme in three parts as of January 1, 2022; home acquisition reserve, repayment position, and home acquisition debt.
Gradual reduction in tax deduction for higher incomes
If your income falls in the highest tax bracket, it is advisable to pay deductible items such as gifts or healthcare costs this year. Taxpayers whose income fall in the highest bracket in Box 1 will gradually have less tax advantage from deductible items like alimony, specific healthcare costs, weekend expenses for disabled children, gifts, and mortgage interest. The highest rate at which virtually all deductible items are to be deducted is gradually being decreased to 37,03 percent in 2024.
Change in income-related combination discount for foreign workers
Are you working in the Netherlands but living abroad? From 2022, your partner abroad may now also be entitled to the income-related combination discount. This tax credit can be applied if you have children under the age of 12 and if you and your partner are both working.
Lennart Suurmond is a tax advisor at J.C. Suurmond & zn. Tax consultants. Need advice on the best way to file your 2021 tax return or pro-active tax advice for the coming years? Contact themto present your situation.
