Newsletter April 2002


The second newsletter has seen the light. Thanks for all the nice comments you gave me on my first newsletter. It's good to hear you like to read English newsletters and that you like mine.

 

If you know a subject which can be mentioned in one of my newsletters just let me know.

Some people requested me to do something about the colors of the newsletter, because printing the newsletter would cost too much color ink. So I changed it. 

 

If you received this newsletter in error please let me know. Look below in the left for removal of your email address.


Self employed


As most of you already know I decided to quit my job and start working as a self employed tax advisor. I received many emails with the best wishes and good luck for the future. Thank you very much for your support.

 

After a couple of conversations my employer and I agreed that instead of half May, my last day will be Friday 5 April, so that's today. That really has gone very fast at the end. Now I am free, free to advice my clients as good as possible. With more time to meet my clients when they wish to.  

 

I hope everything will turn out right and that we can look forward to a long relationship.


Time extension ruling for tax advisers


In my first newsletter I told you about the special time extension ruling I have with the tax office. In the mean time I have put all my clients on the time extension list which I sent to the tax office. 

 

For new clients I have to arrange a time extension seperately. 

 

If you still receive a reminder from the tax office please let me know and I will contact the tax office about it.  The tax office will send me a list of the time extension they gave to each of my clients. I will contact everybody about it.

 

Partner rule

 

People pay tax individually as far as possible. Therefore partners pay tax on their own income and can only use their own deductible items. However, some income and deductible items are joint. Joint income and deductible items can be divided randomly between both partners as long as 100% of the income and deductible items is declared. The choice applies, among other things, to the notional rental value for owner-occupiers and the deductible items from the owner-occupied dwelling, childcare expenses and items that come under the personal deduction. But there are some conditions. 

 

If partners are married or have registered their partnership at the Records Office, they are automatically each other’s partners (unless they are permanently separated). Partners living together have to meet certain conditions in order to be considered fiscally as partners.

 

USA: INVESTMENT YIELD TAX IS INCOME TAX


In response to questions of US-citizens living in the Netherlands, the United States competent authorities published a revenue ruling (Revenue Ruling 2002-16) concerning the investment yield tax levied in the Netherlands. This revenue ruling officially confirms that the Netherlands' investment yield tax paid by US-nationals or US-citizens is fully creditable against the United States income tax.


The investment yield tax is one of the components of a revised income tax act in the Netherlands - which became effective on January 1st, 2001 - and reflects a new approach in taxing capital income.
  
This ruling will be published in the "Internal Revenue Bulletin 2002-15" of 15 April 2002.


Mortgage and insurance


One of the possible deductions is still the interest you pay on the mortgage you closed for buying or renovating your own house/apartment. Also the bank provision and the notary costs concerning the mortgage are deductible.

 

If you rent a house there isn't any deduction possible. You don't have a source of income so you won't have to pay tax but there also isn't any deduction. Related to the raising prices of houses it might be interesting to buy a house/apartment instead of renting one. That way you can also get a better accommodation to live and you are more free to change anything in your house.

 

Because I would like to offer a total service to my expat clients you can also contact me with questions regarding mortgages. I can explain the different sorts of mortgages available in The Netherlands and help you getting the right mortgage in your personal situation, naturally all in English.

 

Also all kinds of insurances are part of the service I offer, for individuals and business owners. I am here to advice you, not to close a deal at all costs.

 

Employee savings schemes

 

Employers and employees may agree to set up employee savings schemes in which a certain maximum amount of the salary is exempt from tax and social security contributions. 

 

Since 1 January 1994, new rules apply which exempt employers from paying tax and social security contributions on each employee’s pay to a maximum of EUR 1.313. This is applicable to pay based on:

In premium savings schemes (in Dutch "premiesparen", the employer withholds an agreed amount from the employee’s net pay and deposits this in a premium savings account. The employer can then award the employee a savings premium of up to 100% of the amount withheld, to a maximum of EUR 525. Under certain conditions no tax and social security contributions need to be paid on this savings premium.

 

In payroll savings schemes (in Dutch "spaarloon"), the employer withholds an agreed amount not exceeding EUR 788 of the employee’s gross pay and deposits this in a savings account blocked for at least four years. When the sum is paid out it is not liable to tax or social security contributions.

 

However, the employer is required to pay 15% payroll tax on the exempted amount.

There are some ways to unblock the savings before those four years, like paying for a mortgage, costs for study or if you start a business of pay premiums for a pension scheme.