8 situations in which a tax advisor can save you money
As an expat in the Netherlands, it's likely that you may not fully understand the country’s tax system just yet, which is understandable as most information is only available in Dutch. Therefore, you might not be aware of your situation and the impact of certain actions on your taxes. This could lead to missed refunds or possible undue refunds, resulting in a tax bill with fines and interest in the future, says J.C. Suurmond & zn Tax Consultants.
If you want to make sure you do not miss out on any tax refunds and fully meet your tax liability, it is important to seek tax advice from an experienced tax expert. Expats benefit from a tax advisor who is fully aware of their situation, can assist them for the long term and can advise them adequately as their situation changes.
This is why a good tax advisor asks questions in order to understand your situation and what challenges you might be facing. The advisor consequently comes up with proactive advice and a suggested way forward, which could include tax advice, a tax return based on a no-cure-no-pay arrangement, advice regarding migration, etc.
Keep in mind that a budget cost tax return service does not fit the bill for most expats. You are left none the wiser, do not get proactive tax advice and often do not get the opportunity to ask questions. The only advantage is “I only paid so much for my tax return”. Making use of a budget cost tax return service may seem profitable at first, but there is a chance that they could miss something important.
If you find yourself in one of the following situations, it makes sense to consult a specialised tax advisor.
1. Migration to or from the Netherlands
Moving countries gives you several tax refund opportunities. If you seek immigration or emigration tax advice at an early stage, you can often still optimise the situation tax-wise. For the year you migrated to or from the Netherlands, you will have to file an M form which gives you several extra refund opportunities. Make sure your entire situation is carefully considered by a tax advisor to prevent costly mistakes or missed refunds.
2. Starting your own business or setting up a bv
If you want to start a business in the Netherlands, you will have to take into account many legal and fiscal aspects. This is especially the case of international businesses. Since all these aspects can have a long term impact, it is best to seek tax advice at an early stage.
A tax advisor can, for example, advise you on: which type of business would fit best (sole trader, partnership or limited liability company), what tax facilities you can make use of, what tax obligations your company will have and how to file your tax return correctly and most profitably.
3. Buying a house
Since the interest rate for mortgages is currently low, buying a house is often more favourable than renting. Also, the mortgage interest is deductible in “Box 1”, although the maximum tax deduction rate will be gradually limited in the coming years, especially for the top tax rate incomes.
A tax advisor can assist you with your mortgage interest deduction, but can also advise you if your situation changes. For example, if you are leaving the country, they can advise you whether it is more profitable tax-wise to sell or keep the house. And if you keep it, whether you should rent it out or keep it for your own use.
4. End of 30% ruling period
If your 30% ruling period ends it will impact your net income, but also your worldwide assets. Without the 30% ruling, you will be obligated to declare your worldwide assets on your Dutch tax return (in “Box 3”). Make sure you are prepared and seek tax advice if you have worldwide assets worth more than 30.846 euros or double that amount together with your fiscal partner. If you accidentally forget to mention foreign assets, you may risk a fine of up to 300% of the amount of the obligated tax.
5. Receiving an inheritance or a gift from abroad
Inheritance tax especially, but also gift tax, can be a very complicated matter, depending on many variables. Dutch inheritance and gift tax percentages are pretty high, but there are also tax exemptions. A gift from abroad may not fall under the Dutch tax regime, but you may become liable for “Box 3” tax as soon as the money arrives in the Netherlands.
The sooner you seek advice, the better a specialised tax advisor can work out a way for you to be able to keep as much money from the inheritance or gift as possible. They can also check if there are possibilities to avoid double taxation.
6. Giving money to your children or others
If you give money to your children or other persons, gift tax needs to be paid if the gift exceeds a certain amount. Of course, you want to be fully tax compliant. But you also would want to make sure that as much of the gift as possible ends up with the receiver. A specialised tax advisor can advise you on how to structure things in such a way that the tax-exempt amount is as high as possible. A gift abroad would also be taxable in the Netherlands.
7. Marriage or signing a cohabitation contract
If you are married or in a legally registered partnership, you are fiscal partners and can submit a joint tax return. You can seek tax advice about how to divide deduction options so that they are allocated to the partner with whom this leads to the highest tax refund. Is your spouse / partner an international too? A qualified tax adviser will be happy to assist you in making a complicated international marriage / partnership situation turn into a fiscally profitable situation.
8. Are there other deductions that you can make use of?
There are also tax deductions for gifts to charities, alimony, business facilities and study costs, although these will be gradually limited the coming years for the top tax rate. If you have these types of expenses in the near future and want to structure things in such a way as to gain a maximum tax refund, contact a tax expert!
Lennart Suurmond is a tax advisor at J.C. Suurmond & zn. Tax consultants. Need advice on the best way to file your 2019 tax return? Contact them now!