File your 2021 tax return in the Netherlands
The Dutch fiscal year runs from the 1st of January till the 31st of December. The Dutch tax season is from the 1st of March to the 1st of May 2022. During this period, you have to file your tax return for the year 2021. How much tax you have to pay or get back depends on your situation. You should pay attention to all personal tax deductions; this can save you quite a bit of tax.
Do you need to file an income tax return for 2021?
Everyone in the Netherlands needs to pay tax on their income, including you! Have you received a letter from the Dutch tax authorities? Then you are obliged to file a tax return before the date indicated in the tax return letter (aangiftebrief).
Did you not receive a tax return letter? Then, it is still wise to check whether you have to file a tax return. You do this by submitting a draft declaration. Does it appear that you have to pay more than the assessment limit? Then you are still obliged to file a tax return. In this case, the deadline for sending the 2021 income tax return is July 14, 2022. Are you not doing this? Then the tax authorities could give you a penalty afterward.
But it is also possible that you are entitled to a refund. For example, if you incurred deductible costs in 2021. Think of mortgage interest, ground lease, healthcare costs, study costs, etc. Please note: 2021 is the last year in which you may deduct study costs.
We help both entrepreneurs and individuals with their income tax return.
First tax return: the M-form (tax refund)
Did you move to the Netherlands in 2021? Then, you only lived in the Netherlands for a part of the year and you have to file a special migration tax return form, also known as the M-form. Most likely the outcome of the M-form is a tax refund. The reason for this is that you did not live in the Netherlands for the full year and, therefore, your employer withheld too much taxes. For the next years, you can file the general tax return (also called the P-form).
Tips for the 2021 tax return
Before you complete the 2021 tax return, we will tell you how best to approach this using the following tips.
Tax benefit for expats: 30% ruling
Some expat employees are benefitting from the 30% ruling. Good to know is that the Dutch tax system knows three ‘boxes’ over which you pay income tax. Box 1 is your income from work & homeownership. If you benefit from the 30% ruling, your employer can give a tax-free allowance of 30% of your income. As a resident taxpayer, you are taxable on your worldwide income in the Netherlands. This includes your box 2 (substantial interest in a company) and box 3 (savings & investments) income. However, what a lot of people don’t know, is that you do not have to state your box 2 and box 3 income when benefitting the 30% ruling, with the exception of substantial interest in a Dutch company or real estate in the Netherlands.
Check the pre-completed tax return
When you log in to ‘Mijn Belastingdienst’ with your DigiD, you can already see the pre-completed tax return from the Dutch tax authorities. Compare whether this corresponds with your information. They do not have all your information, and you always remain responsible for submitting a correct tax return. Therefore, give up all your assets. If the Dutch tax authorities discover hidden assets (such as cryptos or a foreign account) afterward, it could lead to high penalties.
Pay attention to the deductible items
In the Netherlands, you may deduct certain costs from your taxable income (deductible costs). Think of specific medical expenses, mortgage interest deduction, donations to a charity, etc. You may deduct those expenses from your taxable income. As an entrepreneur in the Netherlands, you are entitled to extra deductions. These personal tax deductions are not known to the tax authorities. So keep this in mind when filing your tax return.
Don’t forget your student debt!
Do you have a student loan with DUO? You are certainly not the only one. Please note: this debt is not included in the pre-completed tax return, so do not forget to fill it in if you exceed the tax-free capital amount (in 2021: € 50,000). The value of your assets, minus debts, on January 1st, 2021 is your net capital value. There is a good chance that, in this case, your box 3 tax will be reduced.
Fiscal partners? Allocate income and deductibles
Do you have a fiscal partner? You may divide certain income and deductible items between each other. So, you can choose the most optimized way what might lead to paying less tax. We call this the ‘optimale verdeling‘.
Averaging your income
Has your income fluctuated in recent years? For example, because you started working, started as a self-employed person, or reached the state pension age. You probably paid more tax than if you would divide your income evenly over the years. Averaging (middeling) your income could be the solution.
Need extra time? Request a postponement
Your 2021 tax return must be submitted before May 1st, 2022. But do you need more time? Then you can apply for a tax return postponement. You have to do this before May 1st, you will then receive a postponement until 1 September 2022.
Help with your 2021 tax return in the Netherlands
We help both entrepreneurs and individuals with their taxes in the Netherlands. Do you have a difficult situation, do you not find a solution, or do you simply want your tax return to be filed by a specialist? We are happy to help you make the most out of the tax season 2022. Contact us using the details below.