The Dutch income tax return must be filed before April 1 of the year following the tax year. As expected, an extension is possible if the deadline cannot be met but it is highly advisable to consult a tax expert.
If you haven’t received the invitation until July 1 (following the tax year), you must request one within a fortnight. Of course, if you think that no taxes are due, you do not need to do this.
The period for which you can request a tax refund is 5 years from the end of the tax year concerned.
Once the return is filled, the Dutch tax authorities must issue an assessment within three years from the end of the tax year concerned. Note that if an extension was granted, the three-year period will be extended accordingly.
In practice, the tax authorities in the Netherlands issue preliminary assessments within six weeks and due to the fact that they do not review them, these assessments will not differ from the returns filled.
When the authorities do review your return, they will issue the final income tax assessment. If an amount is to be refunded and a preliminary assessment was issued no additional tax will be refunded as this is done with the preliminary assessment.
Self-employed persons are entitled to certain tax deductions, such as the self-employed allowance and small business exemption. As expected, the filing date is the same for them too: April 1.
Employees pay part of their income tax due every month (company’s payroll administration). Consequently, self-employed people’s income tax due should be arranged through preliminary and / or final assessments.
In order to avoid a high final assessment, you can request a preliminary assessment during the tax year and pay in monthly installments. During the tax year changes can be made.
In order to be eligible for the self-employment deduction:
› you must have spent at least 1.225 hours on your business
› the deductions must not exceed 7.280 euros (2012).
Note that the small business deduction is 12% of the taxable profit after the self-employment deduction.
The interest you pay on the mortgage for your main residence is partially deductible and that lowers your taxable income.
As discussed, employees pay part of their income tax due every month so they must expect to receive a tax refund through the assessment.
On the other hand, for self-employed persons, who by default don’t have their payroll tax withheld during the year (look above), the mortgage interest deduction won’t result in tax refund but will reduce the amount of tax they have to pay.
Some costs related to the purchase of the house (e.g. notary fees) are deductible but the mortgage interest in the year of purchase is (usually) only for part of that year. Consequently, the preliminary tax refund must be submitted the following year.