Expatax - Arjan Enneman: Dutch Income Tax
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Dutch income tax Arjan Enneman
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These are the slides to Arjan Enneman's presentation on "Dutch Income Tax" at Expatica's International Job Fair on Saturday, 5 April 2014. Expatax is focused on providing tax, payroll and accountancy services to international companies and their employees, but also a single freelancer can request our help with the preparation of all necessary forms. Expatax can assist you with your tax issues in the Netherlands. We can help you with your tax return and also with the application for the 30% ruling. Arjan Enneman studied Fiscal Economics in Eindhoven, followed education programs at the Dutch College of Tax advisors where he became Certified Tax Advisor and currently doing a master Fiscal Law at the University of Groningen. He also did many other courses and studies concerning taxation, business administration, insurances and mortgages. Arjan is dealing with income tax returns and general tax advice for expats (employees and freelancers) and companies in the Netherlands. He also assists with establishing businesses in the Netherlands and is accredited by the World Bank. He gives workshops about tax for corporate clients, is “Ask the Expert” at Expatica, creator of the Expatax Knowledge Base and speaker at the Expat Housing Seminar. For further information, please go to www.expatax.nl.
Transcript of Expatax - Arjan Enneman: Dutch Income Tax
Dutch income tax
Arjan Enneman
Box system
Total income -/- Personal deductions ------------------------------------- Taxable income -/- tax box 1, 2 and 3 ------------------------------------- Income tax -/- tax credits ------------------------------------- Tax amount -/- advance tax -/- provisional claim
Taxable income
• Box 1 (income from work and home)
• Box 2 (income from substantial interest)
• Box 3 (income from savings & investments)
• Personal deductions
• Tax credits
Box 1
Everything you receive from your employer:
• salary
• bonus, tantieme
• stock options
• free housing, company car etc.
Box 1
Tax free allowances:
• Work related expenses: 100% or certain % or amount (travel, computer, telephone)
• Extra territorial expenses (double housing, home-leave, higher costs of living, permits, language course) See www.expatax.nl/etcosts
Box 1
What if work related expenses are not reimbursed by the employer?
-> not deductible in the income tax return
Except:
- Public transport costs
- Education costs
Box 1 – 30% ruling
Extra territorial costs -> 30% ruling
- Tax allowance for incoming employees who possess specific skills and experience which are scarce on the Dutch labour market.
- Reason: to cover the extra territorial costs.
Box 1 – 30% ruling
Benefits of the 30% ruling:
• (Up to) 30% of the salary can be paid tax free (no other ET costs can be reimbursed separately).
• Tax free reimbursement of international school fees by employer.
• Opt for partial non residence for tax purposes
- box 3 exemption.
• Easier to change drivers license.
Box 1 – 30% ruling
Incoming employee:
• A person who is recruited from abroad or sent from abroad to work in the Netherlands.
• Living > 150 km from Dutch border before coming to the Netherlands during a period of at least 18 months out of 24 months.
• Exemption for persons who promoted at a university in the Netherlands (Phd).
• Nationality/permanent permit irrelevant.
Box 1: 30% ruling
Specific expertise:
• taxable salary of more than € 36,378 (2014) -> gross salary € 51,969
• age below 30 years with a master degree and a taxable salary of more than € 27,653 (2014) -> gross salary € 39,505
• researcher or teacher at a university
• trainee as a medical specialist
Box 1: 30% ruling
• Part time employment
• Arrival or leave during the year
• Maternity or parental leave
• Salary earned elsewhere, even other income
• Allowance less than 30% possible
• Salary earned while in the Netherlands
• Check after 5 years replaced by ongoing check
• Scarcity
Box 1: 30% ruling
• Term: 8 years from the start of the employment contract
• Reduced with the period of earlier stay in the Netherlands (unless ended more than 25 years ago)
• Reduced if the application was filed late.
• When contract ends, applicable till last day of the following month.
Box 1: 30% ruling
• New rules from January 1, 2012
• Employment started before this date -> old rules apply
• - passed the 5 years check
• - before the 5 years check
- new rules applicable after 5 years, except the maximum term and period of previous stay
Box 1: 30% ruling
Change of employer:
• Possible to apply again
• Period between employers < 3 months
Box 1: 30% ruling
Application:
• Filed by employee and employee together or by authorized advisor, www.expatax.nl/30-percent-ruling.
• Within 4 months after start of employment
• Together with all requested documents
• Tax authorities foreign department Heerlen
Box 1
Other income:
• Benefits and periodic payments (pension)
• Self employed income - freelancer: www.expatax.nl/freelancer - result from other activities
Box 1
Deductions in box 1:
• Private pension premiums (lijfrente)
• Main residence you own notional rental value (% of WOZ) -/- mortgage/loan related expenses
More info: www.expathousingseminar.nl
Tax brackets
Combined rates in Box 1 for persons younger than 65
Taxable income
Tax per bracket
Premium National Insurance
Total rate Total per bracket
Cumulative
Of more than
But less than
€ 0 € 19,645 5.85 % 31.15 % 37 % € 7,268 € 7,268
€ 19,645 € 33,363 10.85 % 31.15 % 42 % € 5,761 € 13,029
€ 33,363 € 55,991 42 % 42 % € 9,504 € 22,533
€ 55,991 52 % 52 %
Box 2
• Income from substantial interest of 5% in a limited company
• Dividend
• Capital gain
• Salary as director/shareholder taxed in box 1.
• Tax rate 25% (22% in 2014)
Box 3
• Income from savings and investments
• Unless 30% ruling is applicable
• Foreign assets
• Threshold: € 21,139 (per partner)
• Tax rate 30% based on a fictitious profit of 4% - actual tax paid: 1.2% of assets -/- debts
Personal deductions
• Education costs
• Donations
• Medical expenses
• Alimony ex-partner
• Child support
Tax credits
• General tax credit (max. € 2,001)
• Employment tax credit (max. € 1,723)
• Bonus for working – age > 61 (max. € 1,100)
• Income related combination credit (max. € 2,133)
• Single parent tax credits (max. € 2,266)
• Parental leave tax credit
Fiscal partnership
• Taxation is individual
• Fiscal partners can divide shared income and assets
• Married: automatically fiscal partners
• Living together: fiscal partners if registered at the same address and one of the following -> living together agreement, child, house, pension, previous year
Tax refund?
In which situations could you be entitled to a refund?
• You have not worked in the Netherlands the whole year
• Personal deductions
• Deductions in box 1
• You are a partner without income (whereby your partner has paid sufficient tax)
Tax forms
• P form (Particulieren)
• M form (Migratie)
• C form (Buitenland)
• O form (Ondernemer)
• Provisional tax return
Filing date
• Deadline is April 1 or July 1
• Only if you received an invitation
• Request tax return latest August 1 if you have to pay
• Time extension possible
• One gentle reminder, one warning, then fine
• Filed before April 1 – answer before July 1
• Expatax can assist: www.expatax.nl/taxreturn
Tax assessment
• Provisional tax assessment
• Final tax assessment
Questions?
Check the Expatax Knowledge Base where you can find answers to hundreds of questions.
www.expatax.nl/kb
If your question is not answered there just ask and the answer may be uploaded too.
