The Tax and Customs Administration tries to make it as easy as possible, but you sometimes get stuck on certain terms when filing your income tax return. What does annuity mean? And when are you a tax partner? We list the most important words – and their meanings.
What is included in box 1, box 2 and box 3?
If you file an income tax return, you will be guided through various boxes in the tax return program. These represent the different types of income. Box 1 is about the income from work and home (your main residence) and box 3 is about your savings and money in investments – for example real estate.
The least well-known is box 2. This concerns income from ‘substantial interest’. In other words: the income you receive from shares. Most people can click through quickly, unless you own at least 5 percent of a company or cooperative. Think of a BV. If you receive salary from a BV, it will be taxed in box 1.
What is the aggregate income?
A ‘collective income’ is mentioned on your assessment. The tax return program calculates this on the basis of your income from boxes 1, 2 and 3. The Tax and Customs Administration also refers to this as ‘registered income’. It is used, among other things, for the payment of benefits, DUO and by the CAK, the government agency that deals with social benefits such as the Wmo.
What is Immovable Property?
Immovable property is ‘things that you cannot lift and move’, according to the Tax and Customs Administration. So think of your own house, but also other buildings such as a warehouse or a factory. Or a piece of land (with nothing on it). You pay tax on real estate. Your own house – what you live in – falls in box 1. The rest is regarded as assets and falls in box 3.
What is the notional rental value?
According to the Tax and Customs Administration, you build up capital with your own home. This provides an advantage over someone who rents. Another ‘income’ is the enjoyment of living (in kind). These two benefits are taxed with the notional rental value. The notional rental value is determined on the basis of a percentage of the WOZ value of your home.
Read also: Notional rental value? Here’s how it works and how much you have to pay.
What is a provisional assessment?
If you have to pay money annually or are an entrepreneur, there is a chance that you have already had a provisional assessment. The Tax and Customs Administration then makes an estimate of the income, the deductible items and the capital based on the most recent income tax return. Then you pay in advance. This will be settled with the final declaration. So if you had a provisional assessment at the beginning of 2022, it will now be settled. You can also request a provisional assessment yourself if you know that you will have to pay a lot or that you will receive a refund.
What are deductions?
There are various expenses that you may deduct from your income. This means you have to pay less tax or, in some cases, you get a refund. On the website of the tax authorities you will find an overview of all deductions. This may concern healthcare costs, donations to charities or certain costs you incurred when purchasing your own home.
Read also: Own house in 2022? You must take this into account when filing your tax return.
Until last year, study costs were also deductible, but in 2022 the so-called Stap budget was introduced. With this, every Dutch person can apply for a maximum of 1000 euros for a course. This means that you no longer have the option of deducting study costs from your income tax return.
What are tax credits, such as employed person’s tax credit?
There are various tax credits that mean you have to pay less income tax. The most important are the employed person’s tax credit and the general tax credit. If you are employed, your employer has already deducted this from your payslip. Entrepreneurs must still state this separately in the declaration. Here you will find a list of them all tax credits.
When are you an entrepreneur for income tax purposes?
If you expect to make a profit, you are an entrepreneur. You must then state this profit in the tax return. To make use of deductible items for entrepreneurs – such as the self-employed person’s deduction and the starter’s deduction – you must meet an hours criterion and have spent more than 1225 hours on your company in the tax year.
When are you a tax partner?
If you have a tax partner, you jointly file income tax. Then you can apportion the various deductions. As a result, you may pay less tax. You are a tax partner if you are married or have a registered partnership. You can also be tax partners if you live at the same address. For example, if you have a child together, or if you own the house together.
Read also: Do you have a tax partner? This is how you approach this smartly with your tax return
What is annuity?
An annuity is a capital sum insurance policy, just like a life insurance policy. With an annuity you can save for extra income at a later time. For example, when you retire. The deposit in such an annuity account is deductible. There is a limit, however: an ‘annual space’ is determined based on your income. Everything that falls within that is deductible. Are you putting in more? Then you can no longer deduct it from your assets.
What is corporate tax?
This is tax on the profit in a company. This includes a BV (private limited company) and an NV (public limited company). This is separate from the income tax return.
When do you have to declare a donation?
If you received a large donation in 2022 that exceeds the annually exempt amount, you had to declare this before March 1, 2023 by means of a special declaration for donations. This is not included in the income tax return. If you receive a donation in 2023, you have until 1 March 2024. If you do not declare a donation, you will receive a default penalty of 385 euros.
Do I have to declare an inheritance on the tax return?
If you accept an inheritance, it is part of your assets (box 3). You must therefore include this with the income tax return.
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