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Changes in Dutch real estate transfer tax as of 2021

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Changes in Dutch real estate transfer tax as of 2021

As per January 1st 2021, there are changes in the Dutch real estate transfer tax. If the buyer is between 18-34 years of age, on a one-off basis, no Dutch real estate transfer tax is due when purchasing a home where the buyer will live him- of herself as a main residence, meaning the aim to live there for a longer and majority period of time.

An additional rule to the above applies as of April 1st 2021: The purchase price of the house may not exceed an amount of € 400.000. In case the purchase price does exceed this amount, as of April 1st 2021, a 2% real estate transfer tax rate will apply on the full amount of the purchase price.

Finally, the Dutch real estate transfer tax rates have been adjusted. A buyer with the age of 35 or older, who buys a house in which he/she him/herself is going to live, the real estate transfer tax rate remains at 2%. However for the purchase of a residential house for investment, or commercial immovable property, an increased rate of 8% applies for the real estate transfer tax.

After purchasing a home as your main residence, you may request the tax office for a preliminary tax refund of mortgage interest deduction. We assist with requesting these preliminary tax refunds as well as with preparing the annual personal income tax returns over the year in which such property was bought.

Dutch real estate held by foreign residents, is subject to Dutch personal income tax. We assist various foreign residents with preparing their personal income tax returns. In addition we can directly handle all related correspondence with the tax Dutch office by serving as our clients’ correspondence address.

AirBNB rental income taxed also in case only part of a home is let

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AirBNB rental income is taxed also in case when only part of the main residence home is let. The awaited verdict of High Council (“Hoge Raad”) has recently followed. Whilst it was already clear that income from temporary renting through e.g. airbnb is taxed in case an entire main residence house or apartment is let, the lower courts were of the opinion that income from renting out parts of main residence apartments/houses could not be taxed.

It is now clear that the tax office is also allowed to tax income derived from temporary letting of parts of main residence apartments and houses. The taxation method is that 70% of the rental income (related expenses are deductible) is to be added to the deemed income of home ownership in box 1.

In case the house or apartment is not your main residence, it will most likely (if it is a so-called passive investment) fall into the equity tax system in which a deemed – and not the actual – rental income is taxed.

We can assist with the preparation of your personal income tax return as well as any other required tax, legal, accountancy related service.

 

 

 

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.

The end date of the tax interest lowering is set on October 1st 2020. The interest will then increase back to 4%. Also the tax interest for the corporate income tax will increase to 4% instead of the previously applicable 8%, the 4% for corporate income tax will remain till the end of the year 2021. 

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.