Tax tips
1. Education costs
2. Donations
3. Pensiongap
4. Own property and notary
5. Travel deduction
1. Education costs
If you have decided to follow a course or to go to University, for example to get your MBA these costs can be deductable if the purpose is to get a better job or to make a career step within the current company.
The following costs can be deductible
- enrolment fee
- application fee
- costs of exams
- books and other literature
- materials and pc
The following costs are never deductible
- your own life support, like housing, food and clothes
- travel costs and costs of staying somewhere else
- costs for a room where you can study including furniture
Minimum and maximum amount
Education costs can only be deductible if they are more then E 500. The first E 500 are not deductible. The maximum deductible amount per year is E 15.000. If the employer pays or reimburses part of the fees then this part is also not deductible.
The deduction only concerns costs made for yourself or your fiscal partner. Costs made for your children, like university fees or international school fees are never deductible as education costs in your tax return.
For the deduction it is relevant when the costs were paid.
2. Donations
Money you donate to a good cause may be deductible. Donations to the following organizations can be deducted:
- churches
- charity
- scientific
- cultural
- organizations for the main cause
Examples are the Red Cross, WWF and Greenpeace.
These organizations must be based in the Netherlands. At the moment only 19 foreign organizations without a base in the Netherlands are pointed to be treated as an organizations for which donations are deductible.
Your donations are deductible if the total amount is at least 1% of your income. The maximum amount is 10% of your income. If you have a partner then both incomes are taken together.
You have to prove that you did the donations. A copy of the bank receipt will be sufficient. If you donate money to a specific organization every year then you can optimise the deduction by notarizing an agreement between you and the organization whereby you agree to donate a certain amount every year for five years. In that case no minimum and maximum amount are applicable and the notary costs can also be deducted.
3. Pensiongap
If you are working in the Netherlands and your employer doesn't offer a pension scheme and you haven't arranged a retirement fund yourself yet than you may have a pensiongap. The gap is the difference between what you have arranged and what you could have arranged based on the Dutch rules.
There are different solutions to insure this pensiongap. We advice you to do so to be able to continue living your life like you do now being used to receive your current salary.
One of the possibilities is to insure the gap with a special income insurance called 'lijfrenteverzekering'. It's a Dutch policy for which you pay premium every month or year. The nice thing about this is that the premium is deductible if you have a pensiongap which is big enough to cover the premium you paid. This can be a good way to reduce your tax liability and to insure your future income. The future payments will be normally taxed but against a lower rate if you are 65. With a tax rate of 52% a yearly premium of E 1.000 will lead to a tax refund of E 520.
We do advise to only use this insurance if you are going to stay here for a number of years. Of course we would always like to advice you on an offshore retirement fund. The premiums are not tax deductible but on the other hand future payments are tax free.
If you have a company car and you use this car also for private purposes then you will probably have to pay income tax on this type of income. The more private kilometres you drive the higher the income will be. On this income you will pay tax but you won't build up any pension on this income. This creates a pensiongap which you can insure with tax benefits.
4. Own property and notary
If you own a property in the Netherlands and you use it as your main residence then you may be able to claim some tax deductions. These deductions can be claimed in your tax return. Deductible are costs related to the mortgage.
You can also claim a provisional monthly refund. This has to be done every year again. Contact us if you need help filing the right request.
The costs can be divided in one time only costs and annual costs.
One time only costs
- Notary costs and 'kadastrale rechten' for the mortgage deed
- Valuation costs in order to get a mortgage
- Bank commission called 'afsluitprovise' in Dutch. This is normally 1% of the mortgage but can vary between 0% and 1.5%
- Costs related to the National Mortgage Guarantee
- Fine which has to be paid because of early repayment of the mortgage
Annual costs
- Interest paid on a mortgage for a maximum of 30 year
- So called 'erfpacht' payments
- Interest paid on other loans used for the main residence
Not deductible (costs related to the property itself)
- costs of the buying agreement
- notary costs for the delivery of the property
- the transfer tax
- repayments of the mortgage
- costs of maintenance and renovation
- interest on (part of) the mortgage if it's not used for the property but just to 'consume'
5. Travel deduction
If you travel to your work using the public transport than you may be able to claim a deduction.
You can deduct a fixed amount if:
- the distance between home and work is at least 10 km with public transport
- you travelled to your work at least once a week and back again within 24 hours or at least 40 days per year.
You must prove that you used the public transport by providing a statement from the public transport company, in Dutch called 'openbaarvervoerverklaring'. If you can't get this statement because you travelled using single tickets every day then your employer can make a statement that you used public transport but in that case you must also keep all the single tickets.
You can't claim a deduction if the employer bought the tickets. Any deduction you can claim must be reduced with a travel allowance you have received.
