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Temporary interest measures tax authorities because of Covid-19

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Temporary reduction of collection interest and tax interest

If you do not pay an assessment on time, you normally have to pay 4% recovery interest from the moment the payment term has expired. As of March 23, 2020, the tax authorities will temporarily reduce the collection interest from 4% to 0.01%. This applies to all tax debts.

The tax office charges tax interest if a tax return was not filed on time or was filed for an incorrect amount. The tax interest rate is 8% for corporate tax and 4% for other taxes. The tax office will also temporarily lower the tax interest rate to 0.01%.

This temporary measure will apply to all taxes subject to tax interest. The temporary reduction of the tax rate will take effect from 1 June 2020, except for income tax. For the income tax, the reduction will take effect from 1 July 2020.

If you need any assistance with your tax return, we have been assisting both companies and private individuals for many years.

Pro rata Dutch tax deduction for foreign tax residents

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Pro rata Dutch tax deduction for foreign tax residents. Due to European case law originating from February 2017, new rules are applicable regarding the entitlement to deductible items, tax credits and tax-free allowance for qualified non-resident taxpayers.

An important condition to be met was the condition to pay tax here in the Netherlands on at least 90% of your worldwide income, otherwise opting for deductible items, tax credits and tax-free allowance was impossible.

From now on the Netherlands must also (pro rata) take into account the above mentioned deductible items for cases in which foreign taxpayers do not earn 90% or more of their income in the Netherlands. The conditions to be met are:

1) The foreign taxpayer is, as a resident of another Member State of the European Union, another State party to the Agreement on the European Economic Area, Switzerland or the BES islands (the circle of countries) involved in the taxation of that other Member State or State, or the BES islands;

2) The (world) income of the taxpayer determined by Dutch standards is fully or almost entirely (for 90% or more) subject to wage tax or income tax in two or more other states (including the Netherlands) than the state of residence.

3) The (world) income of a taxpayer determined by Dutch standards is not fully or almost entirely (for 90% or more) subject to a wage tax or income tax in a state other than the Netherlands.

A further condition is that the taxpayer must provide an income statement from the tax authority of the state of residence.

If the taxpayer meets the above conditions, then the right to deduct is according to the extent to which the income to be taxed in the Netherlands is part of the world income. We can assist with preparing the correct processing in the Dutch personal income tax return.

Deadline personal income tax return 2019 & be aware of interest

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Deadline personal income tax return 2019 & be aware of interest. Now that the year has ended, it’s time to prepare for the Dutch personal income tax return 2019! The filing deadline for the Dutch personal income tax return 2019 is May 1st 2020. Here you can find the tax rates for 2019. 

In case you have to pay additional personal income tax on your personal income tax return 2019 be aware of the accruing interest (‘belastingrente’) on the amount on tax due following the 2019 personal income tax return. The tax office may start calculating interest in case your personal income tax return over tax year 2019 has been filed after May 1st 2020.

Since the interest rate as used by the tax office is fixed at 4% on annual basis, this interest rate is well above any interest percentage you may expect to receive on a Dutch bank current account / savings account.

Additional personal income tax may be due e.g. in case of savings held above the applicable thresholds or other taxable income which was not yet taxed, e.g. by means of wage tax and/or a preliminary tax assessment. Here you can find an explanation of the Dutch equity tax system.

Here you can find more information on the possibility to file tax returns retroactively going back for a maximum period of five years, be aware that tax deductions have to be made in the year the expenses were made. An example of a required retroactive filing is the deduction of study expenses in prior years, explained here.

Before filing a Dutch tax return, without having received an invitation from the Dutch tax office, it may be wise to check your Dutch tax residency status which is explained here.

Another possible reason to file your personal income tax return 2019 on time is that the tax authorities will reply (mostly by way of a personal income tax assessment 2019) more quickly. This could be especially interesting in case of an expected tax refund, e.g. in the year of migration (immigration or emigration).

We can assist with the full process to file your personal income tax return. If needed we can arrange for a lengthy filing extension of your personal income tax return 2019, however be aware that the possible interest calculation will not be extended by the tax authorities.

Some brief additional information on the Netherlands Dutch personal income tax system can be found here.

Annual indexation for 2020 minimum salary 30% ruling

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Salary criterion –
A salary criterion is to be met to apply the 30% ruling, below is the annual indexation for the 2020 minimum salary to qualify for the 30% ruling. There are three qualifying salary groups:

1. Scientists do not have a salary minimum;

2. People below 30 years of age with a Masters education have a minimum salary requirement of EUR 29,149 (2020) / EUR 28,690 (2019) / EUR 28,350 (2018) excluding the 30% reimbursement and EUR 41,642 (2020) / EUR 40,985 (2019) / EUR 40,500 (2018) including the 30% reimbursement;

3. For Expats that do not match the groups under 1 and 2, a minimum salary requirement applies of EUR 38,347 (2020) / EUR 37,743 (2019) / EUR 37,296 (2018) excluding the 30% reimbursement and EUR 54,782 (2020) / EUR 53,918 (2019) / EUR 53,280 (2018) including the 30% reimbursement.

Please note that these minimum amounts are subject to annual indexation. In principle the salary criterion may not be decreased pro rata in case of a part time employment. There is an exemption on this rule in case of parental leave.

The salary criterion in principle replaces the prior criterion of required specific skills, in that sense the ruling has become more accessible. Please note however that the salary criterion is a continuous test, the employer is therefore held to continuously check whether all requirements are still met by its employee.

Here you can find full details on all criteria to be met in order to qualify for the 30%-ruling.

We can assist with the full process of obtaining the 30%-ruling, please contact us.

Personal income tax returns can be filed going back five years

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Personal income tax returns can be filed going back five years. Have you received an invitation to file a personal income tax return? In that case you are obligated to timely file such personal income tax return.

If you did not receive such an invitation, but do you have to pay an amount on personal income tax of  € 46 or more (up to and including 2017) or € 47 or more (from 2018)? In that case you are obligated to request the tax office to receive a personal income tax return.

You can also request a personal income tax return in case you are entitled to an amount of € 15 or more on refund. In the table below you can see when your declaration must reach the tax office at the latest.

Year 2018:
Declaration must be received by: December 31, 2023

Year 2017:
Declaration must be received by: December 31, 2022

Year 2016:
Declaration must be received by: December 31, 2021

Year 2015:
Declaration must be received by: December 31, 2020

Year 2014:
Declaration must be received by: December 31, 2019

We can assist with timely filing of your personal income tax return.

Social security international employees; where are you insured?

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Social security international employees; where are you insured?

When you work as an employee or self-employed person in several countries at the same time, it is sometimes difficult to determine in which country you are socially insured and therefore which country is entitled to levy when it comes to social security contributions. The Dutch social premiums are the AOW, Anw and Wlz (national insurance schemes) and the WW, WAO, WIA and ZW (employee insurance schemes).

In order to ensure that several countries do not claim to be entitled to levy premiums, European Union Regulation 883/2004 on the coordination of social security systems has been created. The Regulation contains designation rules that assign the levy rights to only one country in cross-border situations. Please note: the Regulation only applies to EU member states.

Article 11 of the Regulation provides that the country of employment (ie the country in which the work takes place) may in principle levy social contributions. So if you live in the Netherlands but you work in Germany, then according to the Regulation you are obliged to hand over social contributions to Germany (you can never be obliged to do so to in two countries).

Do you perform work in 2 or more Member States for 1 employer? Then Article 13 of the Regulation applies. The rules are as follows:
If you perform 25% or more of the activities in the Member State in which you live, this Member State is entitled to tax.
If you perform less than 25% of the work in the Member State in which you live, then the Member State is entitled to tax where your employer is based, or where your employer is established.

Do you perform work in 2 or more Member States for 2 or more different employers? In this case the following rules apply:
If the 2 employers are located in the same Member State, this Member State is entitled to tax;
If employers are located in 2 different Member States, 1 of which is the Member State where you live, the other Member State is taxable;
If the employers are located in at least 2 different Member States, not being the Member State where you live, the Member State where you live is taxable.

Interesting is the concept of employer that has always been formally explained for the application of the Regulation. From the above rules it emerges, as soon as one does not perform at least 25% of the work in the country of residence and there is 1 employer (this is often the case) that the country where the employer is established is entitled to tax. Consider, for example, professions within professional goods transport, where many borders are crossed and along which they are en route.

A formal explanation of the term employer is about the location on paper. The registered office is usually looked at (in which country is the employer registered). It does not seem incomprehensible that such a formal approach encourages fraudulent arrangements whereby a paper employer is established in a certain country, but actually operates from another country.

On 26 November 2019 the Court of Justice of the European Union decided in a judgment to drastically change this interpretation. In the judgment, the Court answers questions referred for a preliminary ruling by the CRvB (Centrale Raad van Beroep).
There has long been a tendency within jurisprudence towards a more material interpretation of the concept of employer within social security, but this has never been pronounced by the Court.

The present case concerned an Cypriot employer. This Cypriot employer employs many truck drivers who thus have a paper based employer in Cyprus. Social security contributions in Cyprus are considerably lower than in the Netherlands. This goes hand in hand with a poorly functioning social safety net. If you suddenly become incapacitated for work, you can to a lesser extent count on a decent benefit.

The actual situation between the truck drivers and the Cypriot employer was that the truck drivers were fully available to companies established in the Netherlands for an indefinite period of time and that they also exercised actual authority over them. The Court has therefore ruled that the employer is “who has recruited the persons concerned, who in fact has them fully available for an indefinite period of time, who exercises the actual authority over them and who de facto bears their wage costs”.

This way, structures that have nothing to do with reality are avoided and you as an employee or self-employed person are also protected against a weak social safety net.