Do you need to file a personal tax return in the Netherlands but aren’t sure about the process? In this article, the team from Taxsight describes when an individual should file their Dutch tax return and what should be included in it.
First off, let’s start with a brief introduction of the Dutch tax system. The Dutch tax system for individuals is split into different “boxes”.
There are three types of boxes in a Dutch tax return:
- Box 1: Taxable income from freelance / employment work, and main residence
- Box 2: Taxable income from a substantial interest (5% or more shares in a B.V. or equivalent company)
- Box 3: Taxable income from savings, investments and debts which are not considered part of Box 1 or 2
When should a tax return be filed?
The Dutch tax return needs to be filed:
- If you received a letter from the Dutch tax authorities (Belastingdienst) with a filing obligation.
- If you didn’t receive a letter, you should file your taxes if you have anything to declare that leads to taxes in Box 1, 2 or 3.
You also have the option to file your tax return if you expect a refund regardless of whether you received a letter from the Belastingdienst. The tax return can be filed up until five years back.
When is the tax filing deadline?
The filing deadline for the personal tax return is May 1. If the tax return concerns a so-called M-form for immigration / emigration or a C-form for non-resident tax payers, then the filing deadline is July 1. The filing deadline could also be set later by the Belastingdienst, when the letter is issued in a later stage.
Can I request a filing extension?
It is possible to apply for a filing extension of a few months if you can’t make the deadline. However, if you work with a tax consultant, they can get a later deadline due the filing extension ruling with the Belastingdienst.
What should be included in the tax return?
When filing your Dutch tax return you should include all taxable items.
Box 1 Taxation
In Box 1, you declare your personal income from employment and self-employment. Other taxable income that should be included in this box are:
- Pension income
- Income from an unemployment benefit
- Income from a disability allowance
- Received alimony
- Income from activities that do not fall under employment income or business income
- Interest income received from your own limited company (B.V.)
The Box 1 rates are as follows for 2023:
| Brackets | Taxable income | Percentage |
|---|---|---|
| First bracket | until 73.031 euros | 36.93% |
| Second bracket | from 73.031 euros | 49.50% |
Can I claim personal expenses?
In the personal tax return, you can also claim some expenses. Some personal expenses that can be deducted in Box 1 are:
- Mortgage interest and ground lease
- Donations to certain registered charity funds
- Certain medical expenses which are not covered by healthcare insurance and not part of your own risk (eigen risico)
- Paid premiums for additional private pension could be (partly) deductible
- Premiums paid for a private disability insurance (mainly used by self-employed persons)
- Travel expenses to work made with public transport (exceeding 10 kilometres) which weren’t fully covered by your employer
Box 2 taxation
When you hold shares in a legal company, for instance a B.V., this should be declared in Box 2 of the tax return. It should also be reported when receiving dividends as a Box 2 shareholder.
A taxpayer is regarded as having a substantial interest in a legal entity if they, either alone or together with their partner, hold at least 5% of the shares in the legal entity. This interest can be held directly or indirectly.
Additionally, the value of the shares is not taxed on an annual basis in Box 2. Income from a substantial interest consists of the dividends received on such shares and the profits from the sale of shares. Both are taxed in so-called Box 2 and the total tax rate is 26,9% (2023).
It does not matter whether a person holds the shares in a Dutch or a foreign LTD company. If you hold the minimum percentage of shares in the company, you are considered to have Box 2 shares.
30% ruling application and shares in a foreign LTD
The dividend payments received as a substantial shareholder (5% or more) from a foreign entity could be exempt from Dutch taxes in Box 2 if a person has the 30% ruling application and is considered as a partial non-resident taxpayer.
It is required that the company which distributes the dividends is, on the basis of international tax residency rules, considered not to be located in the Netherlands.
Box 3 taxation
Dutch tax law mandates that residents with investments, savings, or property with a value of more than 57.000 euros (2023) must declare these items in Box 3 of their annual personal tax return (Box 3 debts are also included). Tax partners have a double threshold of 114.000 euros. Additionally, the net assets are valued on the reference date of January 1 of the corresponding tax year.
The Box 3 tax rate for 2023 is set at 32% and calculated on the fictional return on income. The rate will be increased to 33% and 34% for 2024 and 2025 respectively.
The fictional return of income in Box 3 is set as follows for 2023:
| Type of investment | Fictional return of income |
|---|---|
| Savings | 0,36% (provisional rate) |
| Investments | 6,17% |
| Debts | 2,57% |
30% ruling
If a resident benefits from the 30% ruling, they can opt to be treated as a partial non-resident taxpayer. A partial non-resident taxpayer - along with their tax partner - do not have to declare or pay tax on savings and investments in Box 3. The only exception is Dutch real estate that is not considered your primary residence. This real estate will have to be declared in Box 3 of your personal income tax return.
Taxsight offers tax-filing services for individuals and entrepreneurs in the Netherlands. Whether you need help with payroll, applying for 30% ruling, or have a specific tax situation, their tax advisors are happy to help. You can reach their team by calling +31 (20) 261 3221 or by emailing [email protected].