Filing for income tax returns in the Netherlands
The start of the year doesn’t just bring New Year’s resolutions, but also the need to settle your income tax return. In this article Broadstreet explains the procedure and takes you through the basic steps.
In the Netherlands, the fiscal year runs from January 1 to December 31. Around the first week of February the tax authorities start sending invitations to submit your income tax return. In general, the tax return has to be submitted before April 1.
If you receive the tax form much later than February, a different submission date will be applicable. This date will be mentioned on the form.
Extension for filing income tax returns
If you cannot meet the deadline for filing the return, you can request for an extension. The tax authorities will impose a penalty for late filing, so it is important to keep a close eye on the deadline.
The different types of income tax forms
The tax authorities issue different types of tax forms:
• P form
Most common tax form for those who are in a regular employment situation and have resided in the Netherlands the entire year.
• M form
for those who arrived in the Netherlands during the year and became a resident or for those who were a resident and left the Netherlands during the year.
• C form
for non-residents who have had Dutch sourced income during the year.
• W form
for those who have had income from self employment.
• F form
for relatives of a deceased person.
How the Dutch tax system works
If you work in an employment situation, payroll tax is withheld from your salary. If you work in an employment situation the full year, you will most likely not have to pay any additional income tax. If you are in such a situation, you will probably not even receive an invitation from the tax authorities.
If you haven’t received an invitation to submit your return, you can request the tax authorities to issue a tax form on your behalf. For instance, if you know you have to report income to the tax authorities that hasn’t been taxed yet, you are obliged to request a form and submit your tax return.
On the other hand, if you have had tax deductible expenses, you may want to submit your return to reclaim taxes.
Deductible expenses are e.g. tuition fee for a course/study/MBA which enables you to earn income, restricted expenses for medical expenses, alimony, expenses for historic buildings, donation.
However, even in case you do not have anything to declare, other than your regular employment income; it may still be worthwhile to submit a return.
For instance, if you and your partner both work and have a child under the age of 6. In that case you may be entitled to the income depending combination tax credit, which is max. € 2,133.
How to file for Dutch income tax return
If you do not use the service of a financial advisor, you can also file the tax return yourself.
The tax return has to be submitted electronically for which you can download the software program from the website www.belastingdienst.nl.
Once completed, you can submit the return electronically by using your digiD. In case you do not yet have a digiD, you can you request one through www.digid.nl
After submitting your income tax return
After you have submitted your tax return, you will receive a preliminary assessment from the tax authorities. In case you were invited by the tax authorities to submit your return before 1 April, and you have indeed filed your return before this date, you will receive notice from the tax authorities before 1 July.
In any other case, it may take around 10 to 12 weeks before the tax authorities send you a notice. And if your tax return was submitted with either a C or an M form, it may even take up to 24 weeks or more.
Initially you will receive a preliminary assessment from the tax authorities, which is based on the tax return, but without being checked by the tax authorities. Once they have checked the return, a final assessment will follow.
Filing your first year’s tax return with an M form
If you came to live or work in the Netherlands in the course of the year or left the Netherlands in the course of the year, then filing a tax return may be advantageous for you.
Dutch wage and income tax is calculated on the basis of four progressive tax brackets. The higher your income, the higher your tax bracket. The wage tax that is withheld at source from your salary is levied on the basis of your estimated annual salary, which is then calculated back to a monthly amount.
Therefore, if you have only worked for half a year in the Netherlands, your gross annual salary will be lower than estimated. The amount of wage tax withheld will therefore be too high. An income tax return will result in a rebate of this wage tax.
Should you have just found out you were probably entitled to a rebate for previous years, but you never filed a tax return, no worries!
You can file your tax returns retrospective for five years. So it is still possible to file your 2007 tax returns up until 31 December, 2013.
In short, it may be worth your while to file an income tax return, even if you have not received an invitation yet!