End-of-year tax tips 2021

Dutch income tax

Paying taxes is not a bad thing, but make sure that you use all deductible items optimally! Sometimes, it can be advantageous to still make some expenses in 2021.

Pay your study costs this year!

Are you following an education? Then, make sure you pay most of the study costs in 2021. If you meet the requirements, you can still deduct these. From 2022, the deduction for study expenses stops in the Netherlands. As an alternative, the STAP budget will be introduced. Read more about it in this article.

Entrepreneurs: make optimal use of the investment deduction.

You may be entitled to the small-scale investment deduction (KIA) if you invest more than € 2,400 in 2021. The KIA is an extra deduction on the profit, which depends on the amount invested in the year. Do you have investments planned? Then examine whether it is beneficial to do this in 2021.

Box 3 tax

Being wealthy is fun, except on January 1st! Then, you prefer to have as few box 3 assets as possible because this is the reference date on which the box 3 tax is based. It can therefore be fiscally advantageous to reduce your box 3 capital. You can do this in several ways:

Make an expensive purchase. Maybe even your dream car?

Do you have big expenses planned? For example, have you been dreaming about a specific car for a while? Then, consider buying it this year to reduce your assets!

Use the (increased) gift exemption!

Because of the coronavirus, the gift exemptions have been increased once by € 1,000 in 2021. This means that you can give your child € 6,604 tax-free in 2021. For other recipients, this amounts to € 3,244. Do you want to give your children or grandchildren something extra? Then take advantage of this gift exemption! Double the advantage: because that way, you also reduce your capital.

Pay off your mortgage sooner.

Making extra repayments on your mortgage is also an option to reduce your capital. Before you do this, it is wise to consult with a mortgage advisor. You should keep in mind that you do not pay off too much; otherwise, you could receive a penalty. This penalty interest is deductible!

Pension gap? Fill this!

Have you not built up enough pension for a while? You’re not the only one; many people in the Netherlands have a pension gap. Do you want to supplement your pension? You can do this via the fiscal year space (in Dutch: jaarruimte)! Are you doing this before 2022? Then, this is twice as tax-efficient! On the one hand, you can deduct the money you put in from your income tax; on the other hand, you lower your box 3 tax!

We are happy to help!

Do you want advice about the end-of-year tax tips for 2021? Do you want to know what is the most advantageous in your specific situation? We are happy to help you! Contact us using the details below.

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