Navigating Tax Season in the Netherlands: Tips and Updates for 2023 Filings

As the arrival of spring approaches in the Netherlands, there's one less-than-pleasant task on the horizon – filing your tax return.

Starting from March 1, 2024, the Belastingdienst tax office is ready to receive filings for the year 2023. Your tax declaration must be submitted by the deadline indicated on your tax demand, or if you haven't received one, before July 14. It's highly advisable to begin the process promptly, as recommended by tax expert Blue Umbrella, especially for international clients.

"While the standard deadline is May 1, it's prudent to adhere to that. However, you can also request a three-month extension at no cost, so it's wise to do so promptly," noted a tax expert from Blue Umbrella.

Regarding tax changes for 2023, there are no significant alterations: the basic tax rate on income has marginally decreased to 36.93%, and the highest rate for income exceeding €73,031 remains at 49.5%. While employees benefit from a slightly higher tax-free allowance, freelancers receive less. Additionally, the "Box 1" income encompasses the property you reside in, with a tax levied on owner-occupied homes ranging from 0.35% for homes valued up to €1.2 million to 2.35% for homes exceeding this value.

However, there's still the opportunity to claim partial relief for mortgage interest payments. Despite the reduction in mortgage interest rate relief for 2023 to 36.93%, it's advantageous to assess which financial partner should claim it – seeking advice from your accountant is recommended.

This year sees an increase in corporation tax and the levy for individuals with substantial dividend payouts and over 5% ownership in a company (Box 2). Although these changes may not favor those with a B. limited company, the overall impact is likely marginal, according to the Blue Umbrella expert.

Furthermore, if you're a tax resident in the Netherlands, it's essential to report your global income and wealth. The first €57,000 of wealth is exempt from tax, followed by a 32% tax on additional wealth based on government estimates (Box 3).

For newcomers to the Netherlands in 2023, while the government may not mandate a tax return, it's usually beneficial to file one. Employers often deduct taxes assuming full-year earnings, potentially resulting in a tax refund for partial-year residents.

An important misconception among foreigners is assuming that setting up a company abroad exempts them from reporting it in the Netherlands if they're tax residents here. However, all worldwide income must be declared if taxed in the Netherlands, considering dual taxation treaties.

The exception for 2023 lies with individuals benefiting from the 30% ruling, who may opt to be partially tax residents elsewhere, allowing taxation of wealth in its actual location.

As for tax deductions related to businesses, such as those for electric vehicles under the MIA/Vamil scheme, ensure timely filing within three months of purchase. Additionally, seek expert advice to ascertain the eligibility of proposed business expenses under the Dutch tax system.

Above all, early tax filing is strongly recommended. Blue Umbrella aims to process filings within five working days, albeit it may take up to two weeks during peak periods. Ignoring warning letters from the Belastingdienst could result in fines, and any outstanding taxes by May 1 incur a steep 6% interest charge.