If your income is relatively low, you pay little (or sometimes no) tax. This sounds logical, since the Netherlands has a progressive tax system. But what if you incur deductible costs, but your income is too low to (fully) settle the deductible items against your income? This leaves an amount that you may deduct from your income in another year, we call this a remaining personal deduction (in Dutch: restant persoonlijke aftrek).

Of what does the personal deduction exist?

The personal deduction consists of the total amount of the deductible items, you can think of:

personal deduction

Remaining personal deduction

Was the total amount of your personal deduction so high that you can not fully settle it with your income of that year? Then you have an amount left over: a residual personal deduction. You may deduct this amount from your income in the following year. Do you still keep a residual amount after that year? Then you move this to the next year. Therefore, it is important to file your Dutch tax return each year!

Where can you find the remainder of your personal deduction?

Are you not sure whether you still have a remaining personal allowance? Check your final tax assessment of last year, here you will find the amount. You should always settle this amount with the next year. Only when there is some leftover, you can set it off against the following year, and so on.

You can change your tax return up to 5 years ago!

Do you now realize that you have not fully utilized all deductible items? Don’t worry, you can still adjust your tax return up to 5 years ago. Have you incurred study costs (in 2021 or earlier), healthcare costs (including dietary costs), or other deductible costs, and have never stated this in your tax return? We advise you to adjust the declarations so that you do not leave any money behind. Also, if you still had a low income in those years, it might be useful in the future!

Allocate deductions among tax partners

Do you have a low income and a tax partner? In that case, you may allocate the personal allowance in the most optimal way. Any division is possible, as long as the total is 100%. If you have a low income, you can place your personal allowance with your tax partner. Does your tax partner’s income fall into bracket 2? Then it is advantageous to deduct the full amount from that income since the tax rate in the second tax bracket is higher.

Cropped shot of a young couple using a laptop while going over their finances at home

We are happy to help!

Could you use some help on how to make full use of the deductible items? Or to get to the most optimal allocation of fiscal partners? We are happy to help. Please contact us using the details mentioned below.

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+31 (0)20-2170120