The 2018 Dutch income tax return can be filed as of 1 March 2019. Who is invited by the tax office to file a tax return, must file it. Who is not invited, is either allowed to or obliged to file a tax return depending on the facts. This applies to resident as well to non-resident tax subjects. Below we describe who has to file a tax return, what has to be included in the tax return and when the tax return has to be filed.
1. Who has to file a tax return?
A. Resident tax subject
Who is invited by the tax office to file an income tax return, is obliged to file it. Even in case no tax is due. Who is not invited to file a tax return, is obliged to file one anyway in case a tax payment of more than € 46 is expected and is allowed to file a tax return voluntarily in case a tax refund is expected exceeding € 14. Summarized:
|Invited||Income tax return must be filed|
|Not invited, expected tax payment > € 46||Income tax return must be filed|
|Not invited, expected tax refund > € 14||Income tax return may be filed voluntarily|
B. Non-resident tax subject
The above applies to non-resident tax subjects as well, i.e. those who reside outside the Netherlands but have taxable income in the Netherlands.
2. What has to be reported in the tax return?
A. Resident tax subject
Earnings are divided into 3 boxes which each have an own tax rate:
- In box 1 the ‘income from work and living’ is taxed:
- Income from work: income from profit, salary, other activities and periodical benefits.
- Income from living: rental value of the owner-occupied home -/- mortgage interest and costs.
- Deductible items: under conditions payments for income provisions are tax deductible (annuities, disability to work).
- Tax rate: ascending to 51,95% maximally.
- Losses from box 1 can be settled with income from box 1 (3 years back and 9 years in the future).
- In box 2 the ‘income from a substantial interest’ is taxed:
- Substantial interest: exists in case of an (in)direct ownership – with the tax partner – of at least 5% of the shares or (right to enjoy) profit participation rights in a domestic or foreign company or the voting rights in a cooperation or an association with a cooperative basis.
- Income: regular benefits (like dividend) and benefits from disposal (like profit on the sale of shares).
- Tax rate: 25%.
- Losses from box 2 can be settled with income from box 2 (1 year back and 9 years in the future).
- If the substantial interest no longer exists but there is yet an unsettled box 2 loss, this loss can be converted into a tax credit to reduce the tax in box 1.
- In box 3 the ‘income from savings and investments’ is taxed:
- Tax base: assets -/- debts -/- tax free threshold.
- Tax free threshold: € 30.000 per tax subject.
- Income: a deemed yield on the tax base. In 2018 the deemed yield amounts to 2,017% up to a tax base of € 70.800, 4,326% on the tax base from € 70.801 up to € 978.000 and 5,38% on the excess.
- Tax rate: 30%.
Additionally, tax deductible items, tax credits and settlements can be taken into account before the tax amount results:
- Personal tax deductible items:
- The following items are tax deductible: paid partner alimony / health costs / study costs / expenses for a national monument / remitted venture capital / gifts.
- Some of the above items have their own deduction thresholds.
- The items are successively deducted from the income in box 1, then box 3 and then box 2. A leftover can be deducted in a following year.
- Foreign income and/or assets/debts can give entitlement to a tax deduction to avoid double taxation (depending on an applicable tax treaty or the Dutch Decree to avoid double taxation).
- After applying the applicable tax credit(s), the deduction of advance taxes (wage tax/dividend tax) and the settlement of preliminary assessments or refunds, an amount of tax to be paid or to be received remains.
The above can be summarized as follows:
|BOX 1: WORK AND LIVING||BOX 2: SUBSTANTIAL INTEREST||BOX 3: SAVINGS AND INVESTMENTS|
|+/+||Profit from a company
Result from other work
Benefits from disposal
-/- tax free threshold
|-/-||Payments for income provisions||–||–|
|+/-||Owner-occupied home: rental value -/- mortgage interest and costs||–||–|
|-/-||Personal tax deductible items (deduct from the income in box 1, then box 3, then box 2):
Paid partner alimony / health costs / study costs / expenses for a national monument / remitted venture capital / gifts
|-/-||Leftover personal tax deductible items previous years (deduct from the income in box 1, then box 3, then box 2)|
|-/-||Losses box 1||Losses box 2 (possibly to be converted into a tax credit in box 1)||–|
|=||Taxable income box 1||Taxable income box 2||Tax base savings and investments box 3|
|+/-||TAX (FIGURES 2018)|
|+/+||tax box 1: tax rates ascending to 51,95% on the taxable income||tax box 2: tax rate of 25% on the taxable income||tax box 3: tax rate of 30% on the fictional yield (ascending from 2,017% to 5,38%) on the tax base savings and investments|
|-/-||Tax deduction because of foreign income||Tax deduction because of foreign income||Tax deduction because of foreign assets / withholding tax|
|=||Combined tax box 1, 2 and 3|
|-/-||Combined tax credits|
|-/-||Wage tax / dividend tax|
|+/-||Preliminary tax refund / Preliminary tax payment|
|=||Tax to be paid / to be received|
B. Non-resident tax subject
Non-resident tax subjects merely have to report some of the above income items. On the other hand not all tax deductions apply:
- In box 1 only the ‘income from work and income in the Netherlands’ is taxed.
- In box 2 only the ‘income from a substantial interest in a company resident in the Netherlands’ is taxed.
- In box 3 only the ‘income from savings and investments in the Netherlands’ is taxed. It concerns:
- Real estate located in the Netherlands or rights which (in)directly relate to it.
- Rights to profit shares in a company of which the management is situated in the Netherlands.
- In principle there is no entitlement to the personal tax deductible items, the deduction of payments for income provisions and a part of the tax credits. This can be different for residents of Belgium, Surinam or Aruba and in case the regulation for the ‘qualifying foreign tax resident’ applies.
3. When should the tax return be filed?
Tax return 2018
If one is invited by the tax office to file the 2018 income tax return, it can be filed as of 1 March 2019 and has to be filed 30 April 2019 at the latest. If the tax return is filed before 1 April 2019 then the tax office guarantees a reaction before 1 July 2019.
If a postponement was granted to file the tax return then it can be filed later of course. If the tax return is included in the ‘Postponement regulation for tax advisors’ then the postponement is until 1 May 2020 at the latest.
If not invited to file a tax return then a tax return can still be filed up to 5 years back. That means: a 2013 tax return can still be filed until 31 December 2018, a 2014 tax return until 31 December 2019, etc.