Do you have to file a Dutch income tax return?

When moving to another country as an expat, everything is new. You might feel overwhelmed. We can imagine that the last thing on your mind is worrying about how to be compliant with the income tax system in your new country. However, this is something that might need your attention. Not only to meet the obligations you have in this regard but also because it might work to your advantage.

With this article, we will give you a better understanding of the Dutch income tax system and your rights and obligations in this regard.

When is filing an income tax return in the Netherlands compulsory?

You are obliged to file an income tax return in the Netherlands if:

• You have received an invitation from the Dutch Tax Authorities (hereafter: DTA) to do so; or
• You expect to have to pay back more than €46 (2019), which will most likely be the case if you have another source of income from the Netherlands besides employment income, such as income from substantial interest or savings and investments.

Please note that you should request an invitation for filing an income tax return with the DTA before July 14 of the consecutive year to the tax year. Furthermore, even if you do not have to pay income tax, filing an income tax return could also be beneficial as you might qualify for certain tax deductions, for instance, the mortgage interest tax relief for homeowners.

When do you have to file an income tax return?

The Dutch tax year starts on January 1 and ends on December 31. The income tax return needs to be filed in the consecutive year. When exactly depends on your tax position and the type of form you should file, see the overview below.

*More information about tax residency

If desired, you can request postponement of the filing deadline. You can either do this yourself or, if an intermediary assists you, it will usually be automatically arranged.

Interest

If an income tax return is filed before May 1 of the consecutive year following the tax year, no interest is due over the amount of taxes owed. However, if you file your income tax return at a later moment or if the DTA do not impose the final assessment in accordance with your return, 4% interest is due. Having been granted postponement does not change the fact that interest is due.

In some cases, the DTA reimburses interest. In short, this can be the case if (1) the DTA have taken longer than 13 weeks to impose a final assessment or (2) a provisional assessment was lowered or (3) after a filed objection the amount of taxes due is less than the final assessment.

The final assessment

After you have filed your income tax return, the DTA strive to respond within 3 months. However, officially, the DTA have three years to impose the final assessment. If the taxpayer is granted postponement, this is added to the 3-year-term.

We advise you to always check your final assessment carefully and in time. If you do not agree with the final assessment, you have six weeks to file an objection.

Substantial requirements for the income tax return

You must file your income tax return complete, unequivocal and without reservations. Furthermore, naturally, your income tax return must be truthful.

In order to be able to substantiate the information included in your income tax return, and also considering the DTA’s right to impose additional tax assessments up to five years back, we would advise you to save this information, even though there is no legal requirement to do so for private individuals.

When not meeting your obligations…

In this article, we have informed you about your obligations related to filing an income tax return in the Netherlands. We would like to conclude our article with a summary overview of the consequences of not meeting these obligations:

• Not requesting an invitation when obliged can lead to:
  - A default penalty of at most €5.278. According to the DTA’s policy, a maximum fine will be imposed of 50% of the aforementioned amount.
  - The DTA can impose the final assessment based on an estimation, which will usually be high.
• Filing the income tax return too late can ultimately lead to a default penalty of a maximum of €5.278. However, the tax inspector is obliged to first send a warning prior to imposing the default penalty.
• Not filing the income return after being invited or not filing the income tax return complete, unequivocal and without reservations:
  - The burden of proof is reversed and aggravated.
  - In case of intent, a punitive fine can be imposed of maximum 100% of the amount of the final assessment.
  - Finally, the above is considered a punishable offence which can lead to six years incarceration or a fine of either €8.300 or the amount of the not levied taxes if this is higher.
• Filing the wrong form will not have any immediate negative consequences. You will most likely receive a letter from the DTA requesting you to re-file your income tax return by using the right form.