Newsletter tax return 2016

24 March 2017


No tax return?

This year again we have been informed by clients 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 will need to pay tax on this.

Furthermore the Tax Office in the main is not aware of your possible tax deductions. We advise to have your refund possibilities checked anyhow. We are happy to do this for you.


Tax deductions 2016

In the tax return 2016 you can claim the following personal tax deductions to reduce your taxable income:

  • mortgage interest of your primary dwelling
  • life annuity premiums
  • 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 recognized charitable institutions (refer to the ANBI-list)
  • study costs
  • expenses for maintenance or restoring of a property that is classified as a national monument (listed building)
  • travel expenses for regular use of public transport between home and work
  • weekend expenses for taking care of disabled relatives

The tax deduction for support of living for your children is no longer possible. If your children have study costs which are not compensated by the government, they may claim their study costs in their own tax return. If they have no income, this will result in a loss which is deductible of future income.

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.


Facilities for entrepreneurs

Entrepreneurs can apply for the small business and/or starters deductions and research and development deduction. To be considered for this you will have to work as an entrepreneur for at least 1.225 hours a year. In case you have a part time job besides your own business, more hours need to be spent on your enterprise than the part time job. If the above could be doubted, then make sure you register the hours related to your business.

The investment deductions as well as the depreciation facilities are also possible without the hours criterion. For the energy and environmental facilities, as well as the RDA (research and development) you have to make an application before the expense is made. For more information about thresholds, ceilings and criteria, you can contact us.


Legal interest on tax amounts

With the new tax interest rules, from July 1st 2017 the Tax Office will charge interest on potential tax debts for the 2016 tax return. This interest amounts to 4% for the Income Tax and 8%(!) for the Corporate Income Tax. 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 in a limited way.


Foreign capital and FATCA regulations

The Dutch Tax Office is yet actively tracing declared or non-declared foreign assets and has sent letters to taxpayers with possible foreign assets. Recently a number of such letters originate from FATCA-reporting, which is a US law coordinating international exchange of bank data. Based on FATCA regulations US tax authorities provide information about bank accounts to Dutch tax authorities and vice versa.

As a resident tax payer in the Netherlands you have to declare your worldwide income and wealth. In case you have not declared a bank account or a holiday residence abroad in the past years, you can now declare this by using the amnesty ruling (‘inkeerregeling’) as long as you comply with the conditions. At this point a fine of 120% applies which is levied over the due tax. If you do not make use of the amnesty ruling and your foreign assets are traced by the authorities, you can be fined up to 300%. Several (Swiss) banks have been addressed by the tax authorities to supply information re their clients. After this has happened it is not possibly anymore to make use of the amnesty ruling, which results in fines of up to 300%. We would therefore advise to be report as soon as possible.

30% ruling and foreign wealth

If the 30% ruling applies you can opt for partial domestic taxation which exempts you from taxation of your wealth, as a result of which the above paragraph does not apply.
It is however imperative to complete the tax return correctly and opt for the correct status. If you do state (some of) your box 3 wealth items which the tax forms asks for, the Tax Office concludes that you opt for full Dutch taxation which means you become taxable for your worldwide wealth. This is a tricky pitfall many innocent tax payers have been tripped up by!


Potential tax savings second property

If you own a second property in the Netherlands this is taxed in box 3 at 1,2% per annum over the value. If the property is empty for an extended time it could be favourable to let it out. This could also be to family members. Depending on the level of received rent the taxed value can be decreased by 15% up to 55%. The actually received rent is not taxed anyhow. For more information about the possibilities please contact us.

Incidentally Dutch property always has to be stated in your tax return, even if you have the 30% ruling. More advantageous is investing in foreign property, as double taxation deduction can be requested. As this property (and the rent) does not get taxed at all it is an advantageous investment for Dutch tax purposes.


Charitable giving

Donations to charitable organisations are tax deductible, as long as they exceed the threshold of 1% of your income. If you set up a recurring gift for at least 5 years, no threshold applies. A notary is no longer needed to set this up, only a simple agreement with the charitable organisations. They would normally have a standard agreement available or alternatively a form is available from the Tax Office.

Do you have any further questions? Do you wish to make an appointment? Please do contact us.