From 1 March to 1 May next, you have time to file your 2023 income tax return. Below, we provide tips to make your income tax return as easy as possible.
1. When should you file a tax return?
If you have received a tax return letter from the Inland Revenue that you have to file a tax return, you are obliged to file a tax return. If you have not received a letter from the tax authorities, you may still have to file a tax return. Check yourself whether you have to file a tax return. You have to file a tax return if:
- If you get 17 euros or more back.
- If you have to pay 55 euros or more.
- Amounts lower than 55 euros you do not have to pay and a refund below 17 euros the Tax Administration does not pay out.
Even if you get less than EUR 17 back or have to pay less than EUR 52, you may still be required to file a tax return. This is the case if your assets on 1 January 2023 exceed âĴ33,748 (with tax partner âĴ67,496) and you are entitled to income-dependent schemes, such as benefits or subsidised legal aid.
2. Key deadlines for the 2023 income tax return
From 1 March 2024, you can file the 2023 return. The return must be received by the Tax and Customs Administration no later than 1 May 2024. If you file the tax return before 1 April 2024, you will receive a notice from the Tax Administration no later than 1 July 2024.
If you do not succeed in filing your return on time, you can request a postponement until 1 September 2024. You will pay tax interest if the Tax and Customs Administration receives the tax return after 1 May or if the Tax and Customs Administration deviates from the tax return. Here, the rate of 7.5 per cent that applies as of 1 January 2024 will apply.
This is because the interest is calculated from 1 July following the year for which you file your return, up to a maximum of 19 weeks after receiving the return. The calculation also ends at most 6 weeks after the date of the assessment. For the 2023 return, therefore, tax interest will be charged from 1 July 2024.
If you file your tax return after 1 April, the Inland Revenue aims to respond within 3 months. The notice from the Tax Administration is usually a final assessment of income tax/ national insurance contributions and possibly a final assessment of the Healthcare Insurance Act. In some cases, you will receive a provisional assessment first.
Important: to avoid a fine, the tax return must in any case be received by the Tax Administration before 14 July 2024. If the Inland Revenue has to ask for a return after 14 July, you could face a default penalty of âĴ385. This can go up to 5,514 euros in case of repeat offences.
If you do not send a tax return at all, the Tax Administration will estimate your income and send an assessment based on it. Besides that assessment, you may also receive a default penalty.
3. What data do you need to collect?
The tax authorities want to know what your income is from work and home (box 1), from substantial interest, e.g. dividends from shares in a private limited company (box 2), and what assets you have, such as a second home, shares, savings or crypto currencies (box 3).
For this, you need to collect documents, such as an annual statement from your employer and the WOZ value of your home, if you are a homeowner.
Note: As a homeowner, you need the WOZ assessment with reference date 1 January 2022 that you received at the beginning of 2023. So you do not need the WOZ assessment received in 2024.
This list from the Tax Office indicates which papers you need to have to hand:
Personal data
- Citizen service number (BSN) of yourself, partner and children
- Bank account number
- DigiD of yourself and partner
Revenue
- Annual statement 2023 or pay slips
- Partner alimony received
- Income from non-employment work such as self-employment (administration)
Bank accounts
- Annual review 2023 checking account
- Annual review 2023 savings account of yourself and children
- Annual review 2023 of investments
Living
- The 2023 WOZ assessment of your own home with reference date 1 January 2022, which you received at the beginning of 2023.
- Annual statement of home loan
- Any notary bill when buying or selling the property
Deductions
- Proof of payment of donations
- Proof of payment of healthcare expenses you have not been reimbursed. (Zvw personal contribution, health insurance premium and excess are not deductible).
- Proof of payment of spousal maintenance paid
Other
- Details of loans and other debts
- Records of claims (including against children)
- Details of annuity premiums paid
- An overview of paid disability insurance policies (AOV)
- Details of dividends
- Value of second home under the Valuation of Immovable Property Act
- Value of your crypto currencies on 1 January 2023
If you’ve had these:
- The provisional income tax assessment for 2023
- The provisional assessment of income-related healthcare insurance contributions for 2023
4. All data collected. Where do you report now?
The Tax and Customs Administration offers three ways to file a tax return. From 1 March, the tax return will be ready in My Tax Service or in the tax return app. It is also possible to file a paper tax return using a tax return form you request via the Tax Information Line.
When filing a tax return via My Tax Service or the Tax Service app, much of the information is already filled in in advance. You remain responsible for filling in your tax return correctly, so check these details carefully.
5. Adjust declaration after sending
Once you have signed and sent the declaration, it is always possible to review and amend it. If you filed the return on paper, you will have to fill in and send a form again.
It is also possible to send a letter with the amendment. In principle, the tax return can be amended up to 5 years after the year the assessment is about. However, this does not apply to joint income and deductions of tax partners. These must be corrected within six weeks of the date of the assessment notice, otherwise the Tax Administration will no longer consider changes.
6. Penalties for late filing or no filing
The Tax Administration can impose fines for various reasons: in doing so, the inspector will, in principle, simultaneously decide whether and if so how much the inspector waives of the fine.
Default penalty 1: late request for tax return form: maximum âĴ5,541
We wrote earlier that you do not always receive a return form and then have to check yourself whether you need to file a return. If you are late in asking for a return form to be sent to you, or do not do so at all, you could face a default penalty.
Late in this case means: for income tax, within 6 months of the time when the tax liability arose. If you request a tax return within 2 weeks of these deadlines, the Tax Administration will not yet issue a default penalty.
Default penalty 2: filed late or no tax return: âĴ385 (up to âĴ5,541 in case of repeat)
A default penalty also applies if you do not file the tax return on time or do not file it at all. In this case, not on time means outside the term stated on the reminder. If the tax return is late through no fault of your own, the Tax Administration will not impose a penalty.
No penalty in the absence of all fault (a.v.a.s). For example, you did not receive a letter from the Tax Administration that you have to file a tax return.
Default penalty 3: not paying tax on time: based on assessment amount up to âĴ 5,514
The Tax Authorities can also impose a default penalty if you do not pay tax on time. This also applies if you have not paid the assessment amount in full.
Penalty for intentionally filling in an incorrect or incomplete tax return: 25% to 150% of the concealed tax amount
If you intentionally fail to file a tax return or if you have filled in the return incorrectly or incompletely, the Tax Authorities can impose an offence penalty.
This also happens with an additional assessment the Tax Administration sends if an earlier assessment turned out to be too low. If the understatement arose because you intentionally or grossly negligently filled in incorrect or incomplete information, this counts as an offence and you will be fined.
In case of intent, the fine is 50 per cent of the amount of tax you concealed. For gross misconduct, it is 25 per cent. A special category is intent or gross negligence in box 3 income from savings and investments. No distinction is made between assets accumulated in the Netherlands or abroad. The offence penalty can be up to 150% of the subsequent tax claimed
Note: The aforementioned tax interest of 7.5 per cent for late filing of the tax return or collection interest of 4 per cent for late payment of the assessment will also be charged. So this is on top of any penalty.
7. Provisional/final assessment and assessment payment
After you file your tax return, you will usually receive a final assessment immediately. In some cases, you will receive a provisional assessment first, followed by a final assessment. Usually, the final assessment is no different from the provisional assessment.
You must receive a final assessment at the latest within 3 years after the end of a tax year. Thus, the 2023 income tax assessment must be imposed no later than 31 December 2026. Usually, you will receive the final assessment earlier.
If you had applied for a provisional assessment for 2023
So the Tax Office may impose a provisional assessment when you have filed a tax return, but you can also apply for a provisional assessment at the beginning of the year.
If you received monthly refunds with a provisional assessment before 2023, the Tax Administration will include the amount you received before the end of the tax year in calculating the assessment/refund limit.
If you have already paid tax for 2023 with a provisional assessment, that amount will not be included in calculating the limit.
Late payment
If the assessment shows that you have to pay tax, do so on time. If you are late, you will pay collection interest, we already wrote in point 6. This applies if you still have to pay an amount after the due date. You will also pay collection interest if you have been granted a postponement of payment.
The period over which you pay collection interest starts on the day after the latest payment date and runs until the day on which the amount is in the Tax and Customs Administration’s account. So for the 2023 assessment, the 4 per cent rate that has applied since 1 January 2024 will apply.
Incidentally, you may also receive recovery interest if the Tax Administration takes longer than 6 weeks to pay a refund. Even if you objected and were proven right, the Tax Administration will pay recovery interest to you.
You see, the Tax Authorities can also impose a default penalty for not paying an assessment. And that this can have very nasty consequences with injunctions and attachment of property or wages.
8. What healthcare costs can you deduct?
Have you incurred or are you incurring healthcare costs? And does your health insurance not reimburse these costs? If so, you may sometimes deduct these costs in your income tax return.
Overview of deductible healthcare costs 2023:
Do you incur many expenses for illness or disability? For example, because you are chronically ill, have a disability, or are a bit older? Then there may be healthcare costs you can deduct.
However, some conditions apply to the deduction of healthcare costs. For example, you may not deduct costs for which you can get a reimbursement. And you may only deduct your costs in the year you paid them.
Healthcare costs only deductible above threshold amount
Only the part of your expenses that exceed a certain amount, the threshold amount, is deductible. If you enter your healthcare costs in your online tax return, the threshold amount will be automatically calculated for you and with it the deductible healthcare costs.
Do you pay little or no income tax?
Then also file your tax return online. You may receive an allowance for your healthcare costs. This allowance will then be calculated automatically. You will receive the allowance separately from the tax refund.
Deductible healthcare costs 2023
In this blog (in Dutch), you will read which expenses are deductible and which are not.
9. What kind of donations can you deduct?
Do you give money to charity? Then you can deduct it in your income tax return. Note: the charity must be an ‘Institution for General Benefit’ (ANBI).
Have you agreed with the charity that you will give a fixed amount every year for at least five years? And have you also agreed when these donations will stop? Then this is a ‘periodic donation’. In that case, you may deduct the amount paid each year. From 2023, you may make a maximum of âĴ250,000 per year in periodic gifts. This maximum applies to tax partners together. If the periodic agreement is set down in writing before 4 October 2022, you can still deduct donations up to 31 December 2026 without the aforementioned maximum.
Do you give money to an ANBI once a year, or maybe every month? And you do not agree anything with the ANBI? Then this is an ‘ordinary donation’. You can deduct this donation as:
- You can prove that you have made payments to the ANBI; and
- the total ordinary donations are more than 1% of the joint ‘threshold income’ (in case of tax partners) but at least âĴ 60; and
- the total donations are no more than 10% of your/your threshold amount.
For gifts to a cultural ANBI, you may deduct 1.25 times the amount of the gift in your income tax return.
If you work as a volunteer, you may receive a compensation for this, but if you waive this compensation, you may still deduct the amount as a gift under certain conditions.
10. Do you give money to an association?
Then this can also be deductible if this is a periodic donation set out in an agreement. The association must then have at least 25 members and be registered with the Chamber of Commerce. Also, according to the articles of association, the association must not pursue profit.
11. Maximising deduction rate
Do you pay tax in the highest tax bracket (49.50%, year 2023)? You will then get less back from your deductions such as home mortgage interest. The deduction rate has gone down incrementally in recent years. For In 2023, the deduction rate is equal to the rate in the first tax bracket (36.93%).
12. Pension savings via annuity
If you accrued no or little pension with your employer in the past 10 years, you can save for your pension with tax advantages. Check whether you have annual margin or reserve margin with this Tax and Customs Administration calculation tool. To deduct these premiums in your 2023 income tax return, you had to pay them into your annuity insurance policy or annuity bank account in that year.
13. Declaring assets in box 3
Savings, shares, crypto currencies or a second home are among the assets in Box 3. The value of these assets minus any debts, is the wealth on which income tax is calculated in Box 3.
Crypto
The value of crypto currencies is part of the value of assets in box 3. From 2026, crypto service providers will be required to share tax data on crypto users with tax authorities in EU countries.
Housing
If you have a holiday home or a second home for your own use or for rental, you declare it in Box 3. The value you use is the WOZ value. For the tax return for 2023, you use the WOZ assessment 2023 with reference date 1 January 2022.
If you rent out the property to private individuals, rent protection rules often apply. These rules make it difficult to evict tenants from the property, for example. This depresses the value of the property. This pressure on value is taken into account in the tax return with the so-called vacant value ratio.
The vacant value ratio is a percentage of the WOZ value of a property. The percentage depends on the ratio of the annual rent to the WOZ value of the property and is listed in this table. The annual rent is the rent received in January times 12 months. If the property is empty in the month of January, you cannot apply the vacant value ratio.
From 2023, the vacant value ratio will no longer apply to a temporarily let property. If you let the property at an undervalued rent to a family member, the vacant value ratio is 100%.
Green investments
Green investing and green saving involves making a deposit in funds or with banks that participate in certain projects. Such green investments in 2023 provide tax benefits in two ways. One is the exemption for green investments. You pay tax only if the value of these investments exceeds a certain amount. For the 2023 tax year, this exemption is âĴ65,072 and âĴ130,144 for tax partners. In addition to this exemption, you are also entitled to an additional tax credit that you can deduct from your income tax. This discount is 0.7% of the amount of the exemption you are entitled to. This will therefore be a maximum amount of âĴ455.50 per tax partner in 2023.
14. Random depreciation for entrepreneur
If you bought a new asset in 2023, you are allowed to depreciate it at random. This means that you can deduct half of the purchase value (minus a residual value) from the profit in one go in 2023. Note: this does not apply to all business assets.
15. Excessive borrowing for director-major shareholder
In 2023, the new Excessive Borrowing Act took effect. If you owe more than âĴ700,000 (threshold amount) to your own PLC on 31 December 2023, you must declare the excess in your income tax return as regular income from substantial interest. Only a loan for your own home, subject to conditions, does not count for determining the threshold amount.
If your bv granted a loan to your (grand)child or a (grand)parent, you may also have to include this debt when determining the threshold.
16. Using averaging to reclaim tax
If your income varies greatly in 3 consecutive years, you will pay more tax than if it were the same in those years. You can get this difference back if it is more than âĴ545.
For example, if:
- You have just started working.
- You have taken a time of unpaid leave or sabbatical.
- You stopped working (because you retired).
- You have been made redundant.
Calculate whether you can get a tax refund with a request for averaging.
If you don’t ask for this tax refund, you will never get it. So you have to be sharp yourself. The income fluctuation must have been in the last three years. Depending on your tax rate, you may not get a refund. Even though you do have fluctuating income.
Averaging does not affect the benefits you get. Such as care allowance, child budget or rent allowance. The assessments you have received from the Tax Administration also remain in force.
Please note! The averaging scheme has been abolished with effect from 2023. The period 2022-2024 is the last period you can average.
17. Object to your income tax assessment
For the years 2023 to 2026, the Box 3 levy is calculated using flat rates of return for the three categories ‘bank and savings deposits, ‘other assets’ and ‘debts’.
The lump-sum rate for ‘other assets’ has been definitively set at 6.17% for 2023. The rate for this category is also already known for 2024, at 6.04%. The flat rate of return for ‘bank and savings deposits’ has been finalised at 0.92% and for ‘debts’ at 2.46%.
Meanwhile, several court cases are ongoing about the way tax is calculated on assets in box 3. Major criticism is the difference between the actual return achieved on assets (such as received or dividends) and the flat rate return. Several courts have already ruled that taxation should be adjusted. It is unknown whether the highest court, the Supreme Court, will follow these rulings. It is also unknown how the tax should then be calculated.
The tax authorities have said that they will not impose assessments if the box 3 return shows assets consisting of ‘other assets’ and/or ‘debts’. In practice, this does not always go well. If you do receive an assessment, object to it. This can be done by sending a letter to the Tax Administration that you do not agree with the assessment.
Need more information or help?
If you still want more information as a result of this writing or need help filling in your 2023 income tax return, do not hesitate to contact the tax advisers at AAme.