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Did you know filing your Dutch tax return can be in your favor?
2019-10-30 | By J.C. Suurmond & zn. Tax Consultants
If you are living in a ‘new’ country the thought of having to sort tax matters out can feel like a pretty heavy burden. The fact that most information and tax forms are in Dutch does not help. But filing a Dutch tax return might be worth the effort and can actually be quite profitable. There are many tax deductions for expats which you can make use of. So even if you did not receive a notification from the Dutch Tax office it is smart to check if you should file a tax return. A tax return can be filed retrospectively up to five years back.
To save you time, money and worries you can seek advice of a tax adviser specialized in expat tax advice. This way you can also be sure that you are making use of all possible deductions applying in your personal situation. A good tax advisor will look at the bigger picture and not simply file your tax return as quick and cheap as possible. That way you will know what fiscal consequences you should take into account on a long term base and how you can structure things favourably.
How to gain maximum tax benefit
To give you a head start on reducing your tax liability here are some useful tips:
Planning of tax advantages:
This way you can optimize your situation by for example clustering expenses in one year or postponing or bringing forward investments. Think of:
- change of residency and employment
- education or training costs
- buying property
- financial support of children in education
- charity gifts
- and life insurance annuity payments.
Take advantage or your marital or civil status
If you are married or living together it can be profitable to check out whether you can get any tax advantage from this. If one partner is not working you can see if the non working spouse deduction applies to you.
Check if there is a chance you do qualify for the 30% ruling
If you are not under the 30% ruling it is worth the effort to find out if it would be applicable in your case. This is only the case if you did not live within 150 km of the Dutch border for at least 16 months before you signed the contract with your Dutch employer and your salary is at least € 37.743 (in 2019) taxable salary plus the 30 percent allowance. Also with the 30% ruling good tax planning ahead and seeking expert tax advice is wise.
Make sure you are aware of all tax liabilities
It is important to take notice of factors which can lead to Dutch tax liability and assessment on time to prevent tax claims plus interest and fines, like foreign assets and income. Especially if you already have the 30% ruling you should be aware of the consequences when it ends. (link to second article)
Make use of all sole trader tax breaks
If you or your partner are starting a business or already in business it is also a good thing to seek tax advice in an early stage. There are many tax breaks for the so called ‘eenmanszaak’ or sole traders, especially in the first 3-5 years. If your income is not that high yet it can be better to wait with officially starting a business and count the income generated as hobby or other income.
Which tax form do you need to file in your situation?
In the Netherlands there are several different tax forms. Here are some basics about when to apply which tax form.
M-form: for the year you have moved to the Netherlands you need to file an M-form. This form cannot be filed electronically, but you need to submit this on paper by 1 July. This is 2 months later than the deadline for electronic returns: 1 May. You can request for an extension though through your tax advisor.
There are two other tax forms that could apply to expats: the P-form and the C-form.
The P-form needs to be filed by resident taxpayers, i.e. if you live and work in the Netherlands, your worldwide assets will be taxed.
The C-form needs to be filed by non-resident taxpayers: people who do not live in the country, but have income or assets which are eligible for Dutch tax. If you are not able to file before 1 May, you can request an extension. An expat tax advisor can also do this for you.
The tax advisors of J.C. Suurmond & zn. Tax consultants have since 1986 helped many internationals with their taxes, leading to substantial tax refunds. In some cases we offer a no cure no pay service to optimise your tax refund.