Is a tax return necessary?

If the Tax Office issues you with a tax form or letter to request you to do so, this will have to be filed in any case. If you do not receive a letter, but you have to pay additional tax on your income or assets, you are also obliged to file a tax return. Obviously if you are entitled to a refund, it is in your own interest to file one. For a regular domestic tax return the deadline is May 1st. For a migration tax return (M-form) the deadline is July 1st. For both forms extension can be requested if necessary.

This year again we have heard of tax payers who received a letter from the Dutch tax authorities mentioning that they did not need to submit a tax return, although in their particular situation it would have been either mandatory to file a tax return, or they were entitled to a refund. For example a foreign tax payer with property in the Netherlands; in principle in such a situation tax is due and at any rate a tax return should be filed. Furthermore the Tax Office in the main is not aware of your possible tax deductions. We therefore advise to have your refund possibilities checked.

The Tax Office has also mentioned that some details in the prefilled tax return may be incorrect, such as the life annuity premiums. It is always important to check the figures with the underlying documents. By the way, any electronic messages you receive from the Tax Office (Berichtenbox) are still also sent by regular mail.

Tax deductions 2020

In the tax return 2020 you can claim the following personal tax deductions to reduce your taxable income:

• mortgage interest of your first residence
• life annuity premiums (if deposited before 1st July 2021)
• non-compensated health care expenses (including medical care, prescribed medication, travel expenses for hospital visits);
• financial obligations to an ex-spouse i.e. alimony
• gifts or donations to recognised charities (refer to the ANBI-list)
• study costs
• travel expenses for regular use of public transport between home and work
• weekend expenses for taking care of disabled relatives

The study costs tax deduction will most likely be abolished in 2022; costs paid in 2021 will be deductible in any case.

Do take into account that for some of the mentioned deductions a threshold or other conditions may apply. The expenses may therefore not be fully tax deductible. If you think you had expenses that may qualify and have questions about this, please contact us.

Legal interest on tax amounts

With the new tax interest rules, from July 1st 2020 the Tax Office will charge interest on potential tax debts for the 2020 tax return. This interest amounts to 4%. If you expect a high assessment and you want to avoid paying a high interest, please contact us to request a provisional assessment. In case of a tax refund the Tax Office only compensates interest very frugally.

End of 30% ruling period

Did your 30% ruling end in 2020 or per January 1st 2021? It is important to assess the consequences of the end of the 30% ruling in your particular case. The 30% ruling end will affect your active income (box 1) as well as substantial shareholdings (box 2) and all other assets in the Netherlands and worldwide (box 3).

If you share complete information about your situation we will be pleased to file your 2020 tax return and seek ways to optimize your tax situation. For example: if your partner is still under the 30% ruling assets may be allocated to your partner.