Another year has passed, and soon it will be possible to submit your 2014 tax return. This is no doubt a very important time of the year - as you need to be aware of both your tax requirements and benefits.
Many expats are a little puzzled as to how to proceed when they receive a request from the Dutch tax authorities to submit a tax return. Submitting a return in a new or foreign country is often complicated - although tax advisors can help.
Depending on their work, a lot of expats do not receive an annual request from the tax authorities to submit a tax return.
Your first reaction might be, "What a relief, I don’t have to submit a tax return!" However, this response may be very short-sighted, because expats often have increased tax refund possibilities compared to "regular" Dutch taxpayers.
So, even if you have not received the aforementioned invitation, it is important to have your tax situation checked by an expert to ensure you don’t miss any refund opportunities.
A prime example of such a beneficial situation occurred at our office:
A UK expat came to the Netherlands and worked for a Dutch employer for five years. He never received any tax forms to complete. This particular expat was quite happy with this arrangement, but as time went by, he preferred to seek more certainty about his tax situation. He was worried that he might receive a high tax bill after so many years, so he contacted our office.
A tax consultant worked out the most advantageous scenario and submitted tax forms retroactively for the previous five years. In the end, instead of owing additional tax, he received refunds in excess of 25.000 euros!
Although this situation sounds too good to be true, similar cases occur regularly, showing the importance and advantage of having an expert annually check your tax situation and, more specifically, your refund opportunities.
One situation in which it is likely that an expat will be entitled to a refund is at the start of your time in the Netherlands. When you have registered in a Dutch city council or town hall, the tax authorities will be informed of this and will consider your registration as immigration.
From that point forward, the tax authorities will regard you as a domestic taxpayer, implying that you have all the advantages and disadvantages of a regular Dutch taxpayer.
In the year in which you immigrated a special migration tax form will be issued. This tax form is more complicated than a regular tax return as it transfers your status from non-domestic to domestic taxpayer.
Although this tax form is more complicated, it provides more opportunities for a refund.
On the other hand, in some situations it is not necessary - nor favourable - to register, for example when the duration of your stay is only several months.
Another situation in which it is important to check out your refund possibilities is emigration. This process is very similar to immigration - in fact, it is the reverse situation - with equal refund opportunities.
One simple and essential piece of advice when you return to your home country or proceed to be an expat elsewhere is: deregister with the city council!
Expats regularly seem to forget this last thing when finalising matters in the Netherlands. If you do not deregister, the tax authorities will continue to view you as a domestic taxpayer, and you may miss out on the extra refund entitlements. At the town hall you will need to mention that you are leaving the country and supply a foreign address.
As mentioned above, moving country increases your refund potential. To take full advantage of any tax benefits it is important to ensure that your financial situation is correct and optimised. It is therefore recommended to contact a specialised advisor prior to taking steps towards moving.
It is possible to correct the effects of registration or deregistration, however this can take quite a while and may not always be acceptable to the inspector. Some simple, timely tax advice can make a huge difference.
Lennart Suurmond is a tax advisor at J.C. Suurmond & zn, providing tax solutions for expatriates and businesses.