What are the benefits of fiscal partnership?

Are you tax partners? If so, then you may divide certain income and deductible items in your tax returns as you wish. You may make any division you wish, as long as the total adds up to 100%. The partner with the highest income can, for example, deduct the expenditure. This offers you the greatest tax advantage. However, in some situations you do not have a tax advantage, but also no disadvantage.

You may choose a different division for every question on income and deductible items. The way in which you divide the income and deductible items may have an influence on the tax and contributions you must pay or are refunded.

Example

Your deductible expenditure on your owner-occupied property is € 5,000. Your gross annual salary is € 60,000. A large portion of your income from employment and home ownership falls in the highest tax bracket of 52%. Your tax partner's gross annual salary is € 14,000. This falls in the lowest tax bracket of 33.45%. When you apportion the entire amount to yourself, then the tax advantage is 52% of € 5,000 = € 2,600. When you apportion the entire amount to your tax partner, then the tax advantage is 33.45% of € 5,000= € 1,673.

Tax partnership is also of importance when you have little or no income, since you may then be entitled to refunds of tax credits. However, this is subject to a number of conditions. For example, you must have had the same tax partner for longer than 6 months and your tax partner must pay sufficient (Dutch) tax.

What types of income and deductible expenditure can be apportioned between partners?

You may divide the following income and the deductible items between yourself and your tax partner:

• the balance between the income from and deductible items for your owner-occupied property
• deduction when you have no or only a small amount of mortgage on your owner-occupied property
• income from a substantial interest
• the shared savings and investments tax base (box 3)
• alimony paid and other maintenance obligations
• living expenses for children younger than 30 years of age
• specific medical expenses
• expenses for a temporary stay at home of seriously disabled children, brothers or sisters
• study expenses or other educational expenses
• expenses for a listed building
• donations
• losses on investments in venture capital
• remainder of the personal allowance for previous years

You may notdivide the following income and the deductible items between yourself and your tax partner:

• taxed profits from business activities
• wages, benefit or pension
• public transport commuting allowance
• income received as a freelancer, home help, artist or professional athlete
• income from provided assets
• alimony received and other periodical benefits
• expenditure for income provisions
• negative expenses for income provisions
• negative personal allowance