Dutch tax rules 2020
The Dutch tax system changes every year, this doesn’t make the system easier. This year, 2020, the tax rules changed again. The TaxSavers clarifies the most important changes of 2020 on this page.
The tax brackets
The biggest change of 2020 comes from a change in the tax brackets. The Dutch tax system consisted of 4 tax brackets in 2019. Now, in 2020, we only have 2 tax brackets left. The main goal of this modification is to make our tax system easier. In the table mentioned below, the changes are explained.
|tot €20.384||€20.385 – €34.300||€34.301 – €68.507||vanaf €68.508|
|tot €68.508||vanaf €68.508|
Apart from the fact that the tax system becomes easier, it gives the most people a fiscal advantage. Up to an amount of €20.384 the tariff rises, however the labor rebate and the general levy rebate rise as well. Such that the low-incomes have a fiscal advantage due to the modification of the tax system as well.
In this example we assume a yearly gross salary of €75.000,-. We will compare the difference in income tax between 2019 and 2020.
2019: A yearly income of € 75.000 did have a tax tariff of 51,75%. This shows that €38.812 income tax must be paid in 2019.
2020: A yearly income of € 75.000 has a tax tariff of 49,50%. This shows that €37.125 income tax must be paid in 2020.
Due to the change in our tax system, you have to pay €1.687 less income tax in 2020 in this example.
Mortgage interest deduction
As of 2019, the mortgage interest deduction will be reduced more quickly. In 2019 the mortgage reduction interest tariff was at a maximum of 49%. In 2020, this tariff declined to 46%. In 2023 this tariff will be no more than 37,05%. This adjustment will only have consequences for the people with an income in the highest tax bracket, this concerns incomes above € 68.508. People with an income below this limit will not face a fiscal disadvantage.
This adjustment also applies to other deductions (e.g. gifts and health costs). So, the tariff for other deductions declined to 46% as well, and will further decline to 37,05% in 2023. The same applies here: only people with an income in the highest tax bracket will face consequences due to this adjustment.
Tax tips for the year 2020
For the year 2020, The TaxSavers clarified some tips regarding tax:
1 Pay your provisional tax return at once
When you have enough savings, it’s profitable to pay your provisional tax return 2020 at once, instead of paying it in monthly terms. When you pay at once, you will receive a discount. Given the low interest on savings, using this discount is more profitable.
2 Arrange your tax partnership
In the Dutch tax system, tax partners get the opportunity to choose who declares which deduction or capital and in which proportion they do so. This can lead to quite big fiscal advantages for tax partners. However, only living together with someone does not automatically imply a tax partnership. On Belastingdienst.nl you can see which conditions you should meet. Do you not meet the conditions? You can still make a cohabitation agreement before the 31st of December, 2020.
3 Get a tax adviser
The TaxSavers is happy to help you and to check what the changes and consequences are for you in 2020. Leave your details in our contact form or call us on +31 (0)20 – 2170120 for an informal conversation.
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