The ultimate guide to filing Dutch income tax: key deadlines and tips is an insight from the perspective of the tax advisor. We have over 30 years of experience and would like to share some with you.
The Ultimate Guide to filing Dutch Income Tax
This article is for those who are in the phase of acceptance that tax is part of life. The tax collected is spend on our infrastructure and makes that you can accelerate as a person doing your job. Those we are not yet as this level, we have at the end of this article an awareness moment.
Key Deadlines
The deadlines we have is that if you are invited to file a Dutch income tax return, you need to file before May 1 of the following year. That said, the tax office promises to send you an assessment before July 1 of the following year if you file before April 1 instead of May 1.
Online you can request yourself for an extension in filing, that goes max to September 1 instead of May 1. Via your tax advisor you can even ask for an extension till May 1 the following year.
All very nice, but the moment you file after May 1 following the tax year, interest starts to count. And the start moment of that interest is in the middle of the tax year.
Example:
The 2024 tax return you file before May 1 2025, you receive somewhere in the two years after you filed the assessment. No interest. You filed before April 1, you receive the assessment before July 1 2025. No interest.
You file the 2024 tax return in June 2025, you receive somewhere in the two years after you filed the assessment and the interest is calculated from July 1, 2024 till the day you receive the assessment, which could be April 2027.
What if no tax return was issued to you?
In the Netherlands we have roughly 5 million workers and the Dutch tax office truly does not want to process 5 million tax returns. Those who have had one employer only and no assets exceeding the threshold, will not be invited to a tax return filing. The rule is that the employer withheld the correct amount of tax.
All very nice, but you did have one employer, but your assets exceeded the threshold, what to do? Then we go back to the phrase ‘you oat to know the law’ . Please relax, most Dutch do not know the law either. But that implies you should have known you need to file a tax return not later than 2 weeks after May 1 of the following year. That is your obligation and this is held against you, if it is found out you had to pay tax.
I had two employers, what to do? The tax office knows as well, as nearly always not enough tax is withheld with two employers in one year, you will receive an invitation to file a tax return.
The Ultimate Guide to filing Dutch Income Tax: Tips and property
We are sometimes surprised as well. People buy a property as their main residence and come to our office many years later. They had heard from others they have a tax deduction. Yes indeed you have! The costs related to the loan (mortgage) taken out to purchase the property that is your main residence are tax deductible.
Some couples divorce, have a property that is their main residence. But in these situations often one of the two leaves the property before the divorce is settled, for obvious reasons. For a limited period of time this person no longer living in the house, can deduct the mortgage interest. Important to realize.
Then we have those who take up employment outside the EU. The moment you go outside the EU and you deregister from city hall, you are no longer a Dutch tax resident. You are also no longer tax partners. That implies that 50% of the house mortgage can be deducted. 50% of the house moves to Box 3 and tax is to be paid in Box 3. The new name of the Box 3 is horror box, so please be carefull what you do.
We have plenty of pitfall examples what ‘ creativity’ of persons not taking into account Dutch rules and regulations can lead to.
The Ultimate Guide to filing Dutch Income Tax: Tips and property
The most frequently asked questions is about property abroad. In more Eastern European countries you inherit a part of the house with your family. Some travel to the Netherlands but keep their residence abroad. Some have a house at the sunny sea sight.
The tax treaties have an article dedicated to property abroad. Property is taxed in the country on which soil the property is a burden. Totally not taxed in the other country.
Capital gains tax, we do not know capital gains tax on the sale of a private property. Might come in 2028. Now you need to be careful, other nations, especially the United Kingdom, is aware of this. The moment you sell your Dutch property while you are living in the UK, the UK Revenue makes inquiries. You quickly point out the article of the tax treaty, only to learn the reply of the UK Revenue: we tax the part the Dutch do not tax. While they are well aware we tax nothing of the capital gains. We can make recommendations how to avoid this situation.
The Ultimate Guide to filing Dutch Income Tax: Tips and investments
The famous crypto currency. Many still have the impression that crypto investments are somewhere in the universe in my secret wallet, nobody knows, no need to report any. A silly thought, as there will come one time you would like to spend it. If you think you will lose it all, you might be right, but I cannot expect you invest in something to lose it. The day you convert the crypto currency is the day you are exposed. If you did not administrate well the crypto investment value over the past 12 years, the Dutch tax office will assume what was the value in their favour.
I trade crypto currency, taxed in Box 3, not? Another common question. Box 3 assets are assets that are managed like a portfolio manager does. What a portfolio manager does, nobody knows, and that is exactly the point. Keep it grey to avoid surfing on the boundaries. If you trade in stock, shares, crypto so often that it could be labelled as work, then you exceed the labor a normal portfolio asset manager does. That is the moment the investment moves from Box 3 to Box 1: the proceeds are taxed in Box 1 (49,5% rate).
The Ultimate Guide to filing Dutch Income Tax: Tips and foreign source of income
The method in Box 3 is that a yield is assumed based on the value of the asset. Some international tax payers provide us with rental income, dividend income and interest income from abroad. That is not taken into account in the Dutch tax system. Maybe some of the dividend withholding tax and tax on interest we can claim for double taxation relief.
The more worrying thing are those who have an LLC abroad or a UK Ltd. These are the most common examples. Especially if the LLC is a pass through company, the result is taxed in the Netherlands. But because the LLC person also has a US tax filing obligation, it is only reported in the USA. That is not correct. We offer solutions. That said, we are more fighting the constant challenge in these situations that it cannot be taxed in the Netherlands. There are global accounting and tax principle that also apply in the Netherlands, the LLC and UK Ltd issue is subject to global rules.
Employment income actually performed abroad is a challenge. You need to well document with a travel calendar and other proof that you truly worked abroad, otherwise not double taxation relief.
Employment income from a foreign employer while working remote in the Netherlands is Dutch taxable income. No double taxation relief, as the tax treaties are very clear on these situations.
183 day rule: never applies. The rule is to prevent you being a tax resident in the Netherlands, but if you are living in the Netherlands, you are already a tax resident. Plus, the 183 day rule has two more rules. We refer to the 183 day rule as a rule with three conditions nearly nobody ever meet.
Awareness moment for those who think you can outsmart the tax office
We started this article with a statement that we are in the phase of acceptance that tax is part of life. This is an adult level of existence. Many of you have not yet reached that level. We experience this daily. Some think that if you incorporate a company abroad while earning the income in the Netherlands, the low tax percentage paid abroad will do. Or that if you trade in crypto currency, that nobody will know, hence does not need to be reported. Then we have the persons renting out the home they own, assuming the mortgage company will not find out.
We feel uncomfortable with these persons and we express that in our reply. In domestic situations the Dutch tax office can go back in time 5 years, in international situations that is 12 years. If you think with AI and all that still is to come, that the Dutch tax office will not find out in the next 12 years, you are ignorant. This clear I need to state this, otherwise taxation is still not accepted.
The Dutch tax office has made several years ago an agreement with 150 countries to exchange more actively information. Information of a Dutch tax resident abroad, the Dutch tax office expected to be able to obtain from that foreign nation relevant information. What the Dutch tax office did not expect is that to their surprise foreign nations push already information of persons that were a Dutch tax resident, before anything was asked. That much willingness is there between nations to collect the correct amount of tax.
I hope for those who have not reached the phase of acceptance, that they soon do. Acceptance that tax collection created the infrastructure in the Netherlands that provides you with the opportunity to enjoy.
Tax is exciting
We think tax is exciting. The Ultimate Guide to filing Dutch Income Tax: Key Deadlines and Tips. We can elaborate on this subject to the extent that this article becomes as long as the actual tax rules. The most common situations we addressed. We hope this helps you, or this makes you aware of certain aspects. If that is the case, we are excited already.
