It is possible to list a fiscal partner in your Dutch income tax return. Your spouse is automatically considered your fiscal partner in your Dutch income tax return, unless you filed for a divorce or if you keep separate households.
Living together but not married
If you share a household but you are not married, you can also qualify as fiscal partners if you are registered as living together at the same address, AND you meet at least one of the conditions listed below:
you have a cohabitation agreement signed by a civil-law notary; or
you have a child together; or
one of you has legally recognized the child of the other partner; or
you are a designated partner in either of the partner's pension agreements; or
you own a home together (see 'Home'); or
a child of minor age of either one of the partners is registered at the common address of the partners; or
you were fiscal partners in the previous year.
Possible benefits of being fiscal partners are:
Every taxpayer is required to file their own separate tax return form. However, as fiscal partners you are allowed to allocate certain income and deductions to each tax return in the most beneficial allocation. This will allow you to maximize your refund by allocating certain deductions to the highest income earner.
For example: Partner A has an income of EUR 30.000. The maximum tax rate for this partner is 42%. Partner B has an income of EUR 100.000. The maximum tax rate for this partner is 52%. Partners each own 50% of the home they live in. Net mortgage deduction amounts to EUR 20.000
If the partners do not file their tax returns as fiscal partners, then each partner would claim a EUR 10.000 net mortgage interest deduction in their tax return (50% of the total mortgage deduction). Result:
However, if partners file their tax returns as fiscal partners, then they are allowed to allocate the net mortgage interest deduction to their own discretion, for example 50/50, 75/25 or even 100/0. In this example, partners would maximize their total deduction by allocating 100% of the net mortgage deduction to partner B. Result:
Refund partner A: EUR 0 x 42% = EUR 0
Refund partner B: EUR 20.000 x 52% = EUR 10.400
Total combined refund: EUR 10.400
In addition to the benefit described above, other benefits include maximizing tax free income thresholds by combining tax free allowances for Box 3 purposes. In addition, low income taxpayers are limited in the amount of refundable tax credits (heffingskortingen) they receive. Filing jointly with a high income taxpayer will maximize the credit they are eligible for (this is commonly referred to as the non-working-partner credit).
Possible downsides of fiscal partnership are:
Combining income may limit certain personal deductions that are subject to income thresholds; the higher the (combined) income, the lower the deduction.
OnestopTaxPrep has over 18 years of specialization in providing combined Dutch and U.S. tax preparation and consulting services. This specialization has assisted U.S. nationals living and / or working in The Netherlands and Dutch nationals living in the U.S.A.