Tax returns — the grown-up matter we’ve all been somewhat ignoring is finally upon us: it’s time to file your taxes!
Being an expat in the Netherlands can make this process even more overwhelming than usual, but the money you could receive back makes the time and effort worth it (trust us).
Let’s get an expert look at how to do your tax return in the Netherlands as an international, shall we? 🧐
Before we start: you need to know what you’re doing. In 2022 you will be filing for your 2021 tax returns. This means that you are filing for the earnings that you made last year. In 2023, you will file for your 2022 earnings — and so on. 😉
When is the Dutch income tax season?
A mysterious blue envelope might have slipped through your mailbox recently, inviting you to the magical wizarding school of…oh no sorry, inviting you to file for tax returns.
However, if you don’t receive one of these blue invitations, it doesn’t mean you’re not eligible to file for tax returns in the Netherlands.
In this case, speaking to a tax consultant is a good way to know if you are eligible to get any money back.
Why do you need to file a tax return?
As much as we all dread this process, it’s an important one to complete as it can save you heaps of money when done.
You can also be fined if you don’t submit, and your toeslagen situation can also be affected. In short: file, or lose a bunch of cash.
The deadline: submit by April 30, 2022
You will need to have submitted your tax return forms by April 30 at the latest — set a reminder, put it in your calendar, tattoo this date into your brain if you have to.
Some Dutchies will be stressing to have this done by April 1, as then they can potentially get a refund by July 1. But this is not necessary and is only for those wanting to get money back as soon as possible.
Good to know: If you miss the April 30 deadline, you can apply for an extension (a tax advisor can help you with this).
Important dates for tax in the Netherlands
|January 1||Beginning of tax year for individuals|
|April 1||Potential early refund deadline|
|April 30||General tax return deadline|
|April 1 – June 1||Apply for extension|
|July 1||Receive potential early tax refund|
|September 1||Extended deadline for individuals who apply for extension|
|April 30 (the following year)||Latest date tax return deadline can be extended by a tax consultant|
Personal tax deductions in the Netherlands
Before we get stuck in, let’s start with the good news! There’s a whole range of personal deductible items that are valid for your 2021 tax return to be filed in 2022.
What are personal deductible items you may ask? Put simply, your personal situation may mean that you are entitled to claim money back on the tax you are due to pay.
The items that entitle you to tax deductions change each year, however, so it might be wise to consult a tax advisor if you’re not completely sure about how and if you can deduct certain costs.
Let’s run through some situations that may entitle you to personal tax deductions in the Netherlands this tax season. 💪
Tax deductions when you own a house in the Netherlands
First of all, we’ll start with the lovely Dutch word of hypotheekrenteaftrek, translating to “mortgage interest deduction.” Under this, you can declare the interest you pay on your mortgage and deduct it from the amount of your taxable income, on which you have to pay taxes.
Certain costs that you paid when buying a house are also deductible from taxes. These costs include valuation costs, the fee for the NHG (National Mortgage Guarantee) and some of the notary fees relating to the mortgage loan.
If you’re confused about what tax deductions you are entitled to as a homeowner there’s no need to pull your hair out. A good tax accountant can take the wheel for you.
Tax deductions for charitable donations in the Netherlands
Fun fact: in the Netherlands, you can also claim tax deductions for certain charitable donations that you made throughout the year!
The charities must be recognised as an “institution or organisation for public benefit” and have a non-profit motive. Give a little, get a little truly applies here!
Averaging tax in the Netherlands
Ok, now that we’ve talked about tax benefits, it’s time to discuss averaging. 🤓
What is averaging?
Are you a freelancer? Is your work seasonal or commissions-based? Maybe you’ve had different jobs in the past three years, or went through a patch of unemployment?
If so, you’ve had what they call a fluctuating income. In this case, your income tax over the past three years can be averaged out, and you can get significant refunds.
Note: As of 2023, the Netherlands will get rid of averaging. This means that you will be taxed based on your yearly income only from 2023 onwards.
How much are we talking about and how can you get it?
The difference in tax when averaging needs to exceed €545 since you will only get the surplus refunded. But bear in mind you’ll need to meet some other conditions too in order to apply for an averaging refund:
- You have been a resident of the Netherlands for all three years which you wish you average.
- You need to have a Final Tax Assessment for each of these three years, where you no longer can file an objection if you filed a tax return.
- You’ll need to fill out a separate request within 36 months after the date of the Final Tax Assessments.
- You cannot include a year for which you have already filed an averaging request.
Have an advisor help you
If you’re feeling a little overwhelmed, do yourself a favour and get some help from a tax advisor.
They can help you check whether you are entitled to a refund over the three years combined and fill out the form, so you can get that surplus of €545 added to your bank account. Score!
Filing a tax return as an international in the Netherlands
Life as an international can sometimes be overwhelming and throwing tax season into that mix can be one heck of a confusing cocktail.
But bear with us, there are actually some advantages to being a bamboozled expat when it comes to taxes in the Netherlands.
The 30% ruling — for incoming employees
Have you been hired to come and work in the Netherlands? Or have you been transferred to the Netherlands as part of your work?
Under the 30% ruling, eligible incoming employees are granted a 30% fiscal break in order to cover their costs of moving to the Netherlands.
What does this entail? You may be entitled to keeping 30% of your wage, including reimbursement for moving costs — tax-free!
However, it’s important to bear in mind that there are a number of strict conditions that have to be met in order to be eligible for the 30% ruling.
Additionally, how long this allowance lasts depends on when you applied for the ruling. Finally, you need to apply for (and be approved) for the ruling by the government.
But we’re not complaining — something is better than nothing after all!
Filing taxes in the Netherlands and another country: how to avoid double taxation
As is the case with many expats, you might have income coming from more than one country, or assets in more than one country.
The risk here is that you get taxed twice, which, of course, you want to avoid.
Unfortunately, every situation is different — so it’s best to chat with a tax advisor about your unique setup to save you some serious cash.
The different tax forms in the Netherlands
Just when you thought filing your taxes in the Netherlands was confusing enough, you then find out that there are many different forms for different taxes/circumstances. The four main income tax forms are:
- C Form – Foreign residents that are earning money in the Netherlands but living/working in a different country
- P Form – Private individuals
- W Form – Freelancers and business owners that are making money
- M Form – For people who have migrated to or from the Netherlands
The infamous M-form: a guide for expats in the Netherlands
Let’s talk about the M Form. The M stands for migration, meaning — you guessed it — you must fill it out when filing your tax return for the year you either migrate to, or leave, the Netherlands as a taxpayer. 🌎
In this situation, you have usually spent part of the year living abroad and part of the year in the Netherlands, so the Dutch tax office needs to figure out just how much tax you should pay!
Usually, the Dutch tax authorities will send you an invitation to file your tax returns. The deadline for this is normally July 1.
Note: The M-Form is only for the year that you immigrate to/migrate from the Netherlands. Once you have lived and worked in the Netherlands for an entire year as a tax-paying resident, you file for your tax returns using a P-Form.
When you migrate to the Netherlands, the form comes in two parts, however, it’s all compiled into one form.
The first part concerns your situation while you were outside of the Netherlands, and the next part concerns your situation while in the Netherlands.
There are a number of complicated factors involved in filling out the M-form. Firstly, it’s 43 pages long, and entirely in Dutch (because that makes sense?)
However, there’s also good news! As of 2022, this form can be filled out online — yes, it was all done on paper up until now.
It is strongly recommended that you turn to a tax advisor when it comes to dealing with the monstrosity that is the M-form.
What has changed in 2022 for filing taxes in the Netherlands
A few changes were made for taxation in the Netherlands last year, which will affect how you file for tax refunds now (2022). Here’s what you need to be aware of:
Last year to claim tax deductions for students
Up until 2022, certain degrees in the Netherlands entitled you to a tax deduction.
If your degree was deemed to be one that helps you, a taxpayer, to secure a better position in the labour market — then you could claim money back on essential costs such as examination fees, certain software and any books/study materials that were necessary for your course.
It will be possible to claim a deduction for education expenses in your 2021 Dutch income tax return, but you better savour it, 2021 will be the last year. From the 2022 Dutch tax year onwards, this tax benefit has been ditched.
Income tax will be slightly lower
In good news, income tax rates will drop slightly this year for those who fall within the first bracket — meaning net salaries will be slightly higher. Whoopee! These are the Dutch tax brackets for 2022.
|Income||Tax rate (%)|
What is a tax consultant and do I need one as an expat in the Netherlands?
Personal advice and tailored approach
A tax consultant will advise you on your tax situation. They will make sure you are aware of your obligations as well as any possibilities to lessen your tax burden.
If you like, they can also deal with your tedious administrative affairs for you, so you don’t have to fill out that M-form. 👀
But the most valuable thing a tax consultant can offer is proactive insight. They can let you know how to minimise your tax liability before you even ask, and they’ll quickly be able to provide you with in-depth knowledge of your tax situation.
In a nutshell? They may help you save money in areas you would not have seen yourself.
Feeling a little less scared of that pesky blue envelope? Tell us your Dutch tax experiences in the comments below!