Tax Deductions for Immigrants in the Netherlands: Your 2024 Update

Last updated on August 16th, 2024 at 03:32 pm

Successfully negotiating tax refunds is challenging, even for experienced expats. But understanding how to claim the applicable deductions can significantly impact your income. Fortunately, the Dutch government offers various benefits to help reduce your tax bill. This straightforward Remitly guide will help you navigate the process of claiming tax deductions in the Netherlands for the 2024 tax year.

Who can claim tax deductions in the Netherlands?

To receive tax deductions in the Netherlands, you must meet specific criteria set by the Dutch tax authority (Belastingdienst). What you can claim may vary based on your source of income and residency status. The different resident categories are:

• Residents are individuals living and working in the Netherlands for most of the year, with their main place of residence in the country. This includes those with an employment contract and those paying wage tax.
• Non-residents are individuals who live outside the Netherlands but earn income from Dutch sources, such as business or employment activities. This often includes expatriates working under the highly skilled migrants scheme.
• Partial non-residents are those who reside in the Netherlands for part of the year but have substantial worldwide income from other sources.

Common income tax deductions in the Netherlands

Like most European nations, the Netherlands offers a range of tax breaks.

Dutch income tax deductions

One general tax credit designed exclusively for immigrants and expats is the 30% ruling. Aimed at highly skilled professionals, it requires employers to pay up to 30% of your taxable income as a tax-free allowance. It works like this:

• 30% of your wage is tax-exempt for the first 20 months
• 20% of your income is tax-free for the next 20 months
• 10% of your earnings is tax-exempt for the last 20 months

Employers also remit a portion of your income as social security premiums. That said, you can only access this Dutch income tax advantage if you meet certain conditions. Find out if you are eligible from the Belastingdienst website.

Business Expenses

Entrepreneurs who meet certain conditions can claim the self-employment deduction (Zelfstandigenaftrek). Under some circumstances, it even allows you to take advantage of the 30% rule.

You can also deduct work-related expenses. These are costs incurred during business activities, such as travel expenses, office supplies, and professional fees.

Child tax rebate

You may be entitled to a child tax rebate if you have children under the age of 12.

Healthcare

The following deductions apply to healthcare:

• Medical expenses. You can deduct uninsured medical costs like prescription medications and treatments if they exceed a set percentage of your income.
• Home care. Expenses for home care services required due to chronic illness or disability can also be deducted.

Homeownership

If you own a home, the interest on your mortgage is deductible. Similarly, you could claim a partial reimbursement on expenses related to maintaining a registered historic building.

Charitable contributions

Deduct gifts and donations to recognized charities or public benefit organizations if they exceed 1% of your taxable income.

How to claim tax deductions in the Netherlands

You’ll have to file your tax return before claiming a tax refund or any tax benefits from the Dutch government. Then, simply follow these steps:

1. Gather your documentation. Collect all relevant receipts, invoices, and statements to support your tax relief claim. These could include your mortgage interest statements, medical bills, donation receipts, or educational expenses.
2. Complete the tax return. Fill out your tax return online via the Belastingdienst platform. Much of the information may already be pre-filled based on data provided by your employer. You will need a BSN number to file.
3. Enter deductible elements. Enter the correct data related to deductible expenses in the corresponding sections of the income tax return form.
4. Submit your return. Submit your income tax return using the online functionality or in paper form before the deadline.

Key deadlines for claiming Dutch tax deductions

You are required to submit your 2024 tax return to the Dutch tax office before April 30, 2025. However, you can request an extension up to September 1, 2024, if necessary. Failing to file on time could attract late submission penalties and fines.

How can you maximize tax advantages?

These are our top five tips for making the most of your tax relief:

1. Keep accurate records. Maintain detailed records of every expense during the year to ensure you don’t miss out on any deductions.
2. Use tax software. Consider using tax preparation software or a tax calculator to keep track of expenses and identify potential deductions automatically.
3. Consult a tax advisor. Specific expertise from a tax professional can optimize your deductions and ensure compliance with Dutch tax laws.
4. Bundle deductions. Plan for significant deductible expenses to fall in the same tax year to gain more benefits.
5. Review eligibility. Keep track of different deductible expenses as they can change yearly.

Common mistakes to avoid

• Missing documentation: Failing to keep or provide proof of expenses can lead to tax authorities rejecting potential deductions.
• Inaccurate entries: Ensure every detail on your income tax return is accurate and matches your documentation.
• Overlooking deadlines: Missing filing deadlines can result in penalties and missed opportunities to claim deductions.
• Misunderstanding your eligibility: Not all expenses are deductible; understanding what qualifies can prevent errors.

Where can immigrants get help?

There are several resources available to help you avoid paying more than you owe:

• The Belastingdienst website. The official Dutch tax authority website offers comprehensive guides and tools largely available in English.
• Tax advisors and consultants. Reach out for personalized assistance from qualified tax professionals in major cities like Amsterdam.
• Helplines and customer service channels. Contact the Belastingdienst helpline for specific support and queries.

Understanding and claiming tax deductions in the Netherlands can help significantly reduce your Dutch income tax burden. Keep detailed records and seek expert advice where necessary to maximize your exemptions and ensure compliance with Dutch tax regulations.

Learn more: How to file taxes as a nonresident in the Netherlands

FAQs

What tax deductions are available for immigrants in the Netherlands?

Non-resident taxpayers in the Netherlands can claim deductions related to their income, employment, and national insurance contributions.

How do I get tax exemption in the Netherlands?

To claim tax deductions in the Netherlands, you must be a resident, a non-resident earning income from Dutch sources, or a partial non-resident. Your expenses must be deductible under Dutch tax laws and relate to your income or employment.

How long until I get my Dutch tax refund?

The deadline for filing your tax return, including all deductions, is April 30, 2025, for the 2024 tax year. Typically, you will receive an assessment from Dutch tax authorities within three to six months, after which you’ll receive your tax refund in your bank account.

How do I know which ‘tax box’ applies to me?

Dutch income tax is split into three ‘boxes’: Box 1 is related to income from employment, otherwise known as payroll tax. Box 2 is known as substantial interest or holdings and covers up to 67,000 EUR of income from shareholdings, which will incur a tax rate of 24.5% in 2024. Box 3 is a tax on assets, like savings or second homes.

How do I know which countries have a tax treaty with the Netherlands?

The Netherlands has treaties with several EU member states like Belgium, France, and Germany, among others. Some agreements even cover countries abroad. See the full list here.