The income tax return

When you hear attack, you quickly think of terrorism and ISIS. But our government also commits millions of assessments every year, including the income tax assessment! Although deductible expenses have been considerably curtailed, there are still facilities that allow you to end up paying less tax. The most common ones are explained in this article.


Mortgage Interest
Almost all homeowners are aware that they can deduct mortgage interest from their income. However, not everyone is aware that you can gain a tax advantage by allocating some of these expenses to your tax partner. By using special tax software, it is possible to optimize your return and get the most return out of it. The software provided by the IRS is not suitable for this purpose. Therefore, it may pay to outsource your income tax return to a firm that specializes in it.

Healthcare expenses
Healthcare expenses are deductible from your income, however, they are subject to a threshold of at least €127, or 1.65% of your threshold income. Health insurance premiums are not deductible, nor are reimbursed payments. In addition, expenses that fall within your deductible are also not deductible, unless they are specific expenses such as medical and surgical care, medications, appliances and travel expenses for sick visits

Do you give money to a charity or a church or civic organization? Then these donations are income tax deductible. There is a threshold of at least €60 or 1% of your income. In addition, the following conditions apply:

  • The institution is registered as an ANBI
  • You can prove the donation with a receipt or bank statement
  • There was no quid pro quo

If you intend to make a gift to an institution each year, it is wise to draw up an agreement to do so. In fact, there is no threshold for periodic gifts.

Travel expenses public transport
Do you travel to work by public transport, and is the one-way distance more than 10km? If so, you probably qualify for a deduction for travel expenses. To do so, you must have a public transportation certificate, which can be obtained from the public transportation company. Another requirement to qualify for deductibility is that you typically travel to work at least 1 day a week, or at least 40 days in the year. If you receive travel reimbursement from your employer, it must be deducted from deductible expenses.

Other deductible expenses
In addition to the aforementioned expenses, there are deductions for study expenses, alimony, annuity premiums and maintenance costs for national monuments.

Deductible expenses for entrepreneurs
Do you own your own business or enjoy income from other activities other than wages from employment? Then you would be wise to hire a tax advisor. The Dutch tax system is very complex, and it frequently happens that the rules are not correctly applied by “do-it-yourselfers.” In addition, a tax advisor often pays for itself because they can inform you of tax opportunities relevant to your business!

Entrepreneurs can take advantage of the self-employment deduction of €7,280 (2015), provided it meets the hours criterion. If you are a starter you are also entitled to the starter deduction of €2,123 (2015) for the first 3 years. In addition to these deductions, an entrepreneur is also entitled to the SME profit exemption of 14% (2015). This exemption is applied to the amount after deducting self-employment and start-up deductions. Have you suffered a loss? Then the SME profit exemption works negatively and the tax loss is reduced.

Have you invested more than €2,300 in your business? Then you can take advantage of the small-scale investment deduction. This allows you to deduct 28% of your investment from your income as an additional deduction. There are also additional deductions for investments of a sustainable or environmentally friendly nature.

Do you need help with your income tax return? If so, feel free to contact us for a free, no-obligation consultation.