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What are the benefits of fiscal partnership?


Question:

What are the benefits of fiscal partnership?

Answer:

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 not divide 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

 

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Comments (10)
Comment by tese on Sat, Feb 18th, 2012 at 10:39 AM
my partner lived n worked in holland for one year (march2011 to dec 2011). during that period i was a student with no income and we had a baby together. we have now left holland back to our home country. am i eligible for tax credit and if so how do we apply for tax refund from outside holland. thanks
Comment by arjan enneman on Mon, Mar 5th, 2012 at 9:22 AM
if you are fiscal partners you may be able to claim the tax credit for the non earning partner. you won?t be able to claim a child related tax credit though. a tax return can be filed from outside the netherlands.
Comment by lurong on Tue, Apr 8th, 2014 at 5:52 PM
What is the meaning of tax partner? I have permission in netherlands and have no job, my husband works in netherlands, am I tax partner of my husband?
Comment by arjan enneman on Thu, Apr 17th, 2014 at 6:29 PM
@lurong: married couples are automatically fiscal (tax) partners.
Comment by Karen on Mon, Aug 4th, 2014 at 8:59 PM
My husband still lives in Holland I de-registered from the gemeente. Will he be able to apply for the tax credit?
Comment by Arjan Enneman on Thu, Oct 15th, 2015 at 9:52 AM
If your husband lives in the Netherlands without earning an income and you are living in another EU country your husband should indeed be able to get the personal tax credit.
Comment by Heather on Wed, Mar 9th, 2016 at 12:09 PM
Hi, I am a US citizen but live in the NL and do not have a job. I am wondering if I file taxes in the NL with my fiscal partner, do I have to file them with him in the US? Is it legal to file separately in the US and still file together in the NL? Does this change if I still do not have a job in the NL? and then what happens if I get a job in the NL? I have student loans in the US and if we file together there then I am pretty sure that they will deduct his salary here to pay for them. Especially now that the NL banks are giving over our shared bank account information. Any help or advice is appreciated, thank you!
Comment by Arjan Enneman on Fri, Apr 15th, 2016 at 10:53 AM
You are fiscal partner in the Netherlands by law or not. There is no option to choose. Whether you are fiscal partners or not in the Netherlands will not have consequences for your US tax return. For the US tax return the US regulations are applicable. So you may be a fiscal partner in the Netherlands but not in the US (or other country). The US can‘t decide for the Netherlands and the Netherlands can‘t decide for the US.
Comment by Steve on Thu, Oct 27th, 2016 at 2:00 PM
My wife has significant personal (non portable) assets and occasional income in the UK, including the (inherited) house where she lives with our children, who are at school in the UK. We also jointly share ownership of a house in the Netherlands which I use during the working week. Previously we have paid Dutch tax on Dutch earnings & assets and UK tax on UK earnings and assets. When my 30% ruling expires, (next year) will I then be required to pay tax on my Wife‘s property and assets via box 3 ? If so, would selling the house in the Netherlands enable us to claim an exemption for the UK Property? - A friend has suggested forming a holding company to manage my wife‘s assets as a possible solution.
Comment by Arjan Enneman on Fri, Oct 28th, 2016 at 2:35 PM
The UK property and all your other assets are taxed in the UK since that is where the center of your life is. You declare your world wide income in the UK. In the Netherlands you only declare your share of the NL property based on the tax treaty between the UK and NL.
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