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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 (6)
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.
Comment by Amin on Fri, Jun 23rd, 2017 at 1:24 AM
Hello, I started working as a PhD researcher in the Netherlands in May 2017 (my gross monthly salary for this year is EUR 2192). I live with my partner who has no income. We are from Romania and do not have children. We spend for the rent of our accommodation EUR 890. I would like to know to which tax credits each of us is entitled, and when and how we can claim for them. Also are there any deductions possible related to other expenses such as rent, insurance, travel costs related to move to Netherlands, etc. Thank you.
Comment by Arjan Enneman on Thu, Jul 6th, 2017 at 1:35 PM
Your partner can claim the general tax credit for a non earning partner which is maximum EUR 902 in 2017. The rent you pay is too high compared to your income so you won‘t get a rental allowance. Health care allowance can be claimed, roughly EUR 90 per month. A refund can be claimed by filing income tax returns for you both for 2017. Expenses you mention are not deductible.
Comment by Omar on Wed, Sep 27th, 2017 at 2:59 PM
Does the employee have to take a step to claim this tax credit, or it takes place automatically?
Comment by Arjan Enneman on Thu, Sep 28th, 2017 at 1:15 PM
When an employee joins a company the employer will ask the employee whether the general tax credit should be included in the payroll administration by the employer. This is done since an employee may have different sources of income and if the tax credit is claimed more than once the difference will have to be paid back to the tax authorities when the income tax return is filed. If it concerns a full time contract the employer might already assume that the tax credit has to be claimed for the full time salary and that it is not claimed elsewhere.
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