Time has come again for the Income Tax return for the year 2019. In this newsletter you will find some information about the 2019 tax return and other current tax issues that might be relevant to you.

If you supply your 2019 information, we are happy to look after preparation of your tax return. If you have already sent us your 2019 information we will process your 2019 tax return in due course.

As we receive many documents for the preparation of the Income Tax return at the moment, we cannot file all these returns before May 1st. Therefore we automatically request for an extension to submit the declaration. In principle we process the tax returns in the order that we have received the information. If you have a specific reason why the tax return should be filed quicker (for example for a mortgage application) please let us know. We will take this into account in our planning.

Please do not forget to include information about possible deductible expenses and other relevant changes in your situation. This helps us to optimize your declaration as much as possible. We look forward to receiving your response.

Kind regards,

J.C. Suurmond & zn. Tax consultants

Your trusted advisor

Newsletter tax return 2019

• Is a tax return necessary?
• Tax deductions 2019
• Maintenance costs for historic listed buildings
• Legal interest on tax amounts
• End of 30% ruling period
• Tax changes 2020
• Tax free giving to your children and others

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 2019

In the tax return 2019 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 1^st July 2020)
• 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 2021; costs paid in 2020 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.

Maintenance costs for historic listed buildings

The deduction for maintenance and renovation costs for listed buildings (in Dutch ‘monument’) was abolished in 2019. A subsidy scheme has taken its place. The application for this subsidy must be submitted before May 1st, with no possibility for extension. For projects for which you already entered into contractual obligations in 2018 but invoices were not paid until 2019, a transitional arrangement applies. If these costs were eligible for deduction in the old tax scheme, they also qualify for the subsidy application. Please note that in order to claim a subsidy, you must be on time.

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 2019 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 very frugally.

End of 30% ruling period?

In 2018 the maximum duration of the 30% ruling was limited from 8 to 5 years. For existing cases a transitional period of two years was arranged. This transitional period ends at the end of this year. If your 30% ruling was granted before 2016, your 30% ruling will end as per 31^st December 2020. For all cases granted from 2016 onwards the standard 5 year duration will apply.

It is important to assess the consequences of the end of the 30% ruling in your particular case. If the 30% ruling ends this 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). It may be important for you to know the tax consequences so you can prepare for this. You may also be able to take certain proactive measures this year to mitigate the tax effect. If you share complete information about your situation we will be pleased to check whether we can optimise the results of the 30% ruling with possible effects after the end date.

Tax free giving to your children and others

If you give amounts to your children or other persons in principle you will need to pay Gift Tax. Certain amounts however are exempted. In 2019 the annual tax exempted gift amount to children is € 5.428 (2020 € 5.515) and to other recipients € 2.173 (2020 € 2.208). If your gift exceeded the mentioned amounts it is necessary to submit a gift tax return. Please note that the 30% ruling does not exempt from gift tax.

For gifts in relation to a study or purchase of a property additional tax free amounts apply. From 2017 it is possible again to claim a gift tax exemption of € 100.000 (2019: € 102.010; 2020: € 103.643) if the amount is used for purchasing a house or paying back a mortgage. In these situations it is necessary to submit a gift tax return in order to claim these tax free amounts. In principle the Gift Tax return needs to be done by March 1^st following on the year the gift was made. Let us know if you have not done this yet or if you have any questions about this topic.