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What is the general tax credit?

General tax credit

Every taxpayer is entitled to the general tax credit, in Dutch: 'algemene heffingskorting'. A tax credit is a deduction on the tax calculated on your entire income based on the box system. So first your income is calculated and reduced with the applicable tax deductions. This leads to your taxable income. Tax is calculated based on the applicable tax rates. The tax amount you get is then reduced with the applicable tax credit. So unlike a tax deduction which reduces the taxable income, a tax credit immediately reduces the actual tax amount. 

Payment of the tax credit to the partner

As said, every taxpayer is entitled to the general tax credit. So partners are each entitled to their own general tax credit. If one of the partners has no (or insufficient) income to be able to use the entire tax credit, the tax credit can be paid out by the tax authorities directly under certain conditions. Main condition is that the other partner has sufficient income and pays enough tax to cover the partners tax credit too. So the tax credit is paid out individually, but to determine whether both partners can get it the tax authorities look at the total income and the total amount of tax paid.
Reduction of the payment to the partner

The payment of the general tax credit to the non (or lowest) earning partner is reduced in a period of 15 years with 6.67% per year. This reduction started in 2009, which means that in 2012 maximum € 1.491 (73,33%) of the tax credit will be paid. Under certain conditions it is still possible to get the maximum tax credit though which is related to age and number of children.
In the category Brochures you will find a brochure about the tax figures in the Netherlands for the period 2009 - 2012. It also contains the amounts of the tax credits.
Expatax can of course claim the applicable tax credits for you. Ask us a question to get the ball rolling.


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Comments (2)
Comment by Jinesh Khimsaria on Wed, Jul 6th, 2016 at 6:29 PM
Hi, Would like to know what are the various tax credits that an expat working in Netherlands can earn & is there any limit on his/her income. For eg. If an expat is earning in the range of Euro 50000 per annum & staying on rent with his/her spouse who is not working, then are there any tax credits that he can get?
Comment by Arjan Enneman on Wed, Aug 10th, 2016 at 6:38 PM
Besides the general tax credit also the labour (or employment) tax credit is applicable. This credit will cover the employment related costs. The labour tax credit is income related and in 2016 maximum € 3,103. A salary of € 50,000 will lead to a labour tax credit of € 2,463. The tax credit is calculated by the employer and included in the payroll calculations. So these tax credits don‘t have to be claimed separately. If a partner has no income then the partner can also claim the general tax credit. The tax credit for the partner without (or with low) income is however reduced every year. For 2016 the maximum credit is € 1,042. This credit can be claimed in the tax return of the partner. If the partner does have income and if there are children living at home then child credits may be applicable depending on the age of the child and the income earned. Child credits can be claimed in the tax return. Rent allowance will not be applicable due to the height of the income.
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