Fiscal benefits for private individuals

In The Netherlands there are a number of deductions, benefits and other arrangements with which the government offers fiscal benefits. The question remains what the situations are that you can be eligible for these tax benefits. In the often confusing maze of fiscal laws and regulations it is easy to get lost. That is why Lexlupa will list the most prominent fiscal benefits for private individuals in this article.  

Tax deductions

Since 2001 the right for tax deductions has been recorded in the Law Income Tax*. Replacing the tax-free amounts from before that time, the government uses tax deductions from there on so entrepreneurs and employees can receive deductions on taxes that they need to pay over their income. 

There are a number of tax deductions: 

General tax deductions 

What?
Deduction on the income tax and premium social insurances. 

For whom?
Everyone that receives an income

How?
Employers and benefit agencies settle this deduction. Entrepreneurs apply the deduction at the end of their declaration income tax. 

How much?
The amount of the general tax deduction depends on your income. The table below shows what deductions apply in 2021: 

Taxable income from work and home	General tax deduction
€0 - €21.043	€2.837
€21.043 - €68.507	€2.837 - 5,977% x (Taxable income from work and home  - €21.043)
€68.507 or more	€0

source: Belastingdienst.nl* (check link for discount AOW-age)

Labour deduction 

What?
Deduction on the taxation of labour income. 

For whom?
Everyone who works (both employees and entrepreneurs). 

How?
The employer settles this deduction in the payroll taxes. When calculating the tax assessment the Tax Authorities automatically settles this deduction. Entrepreneurs settle this deduction with their declaration income tax. 

How Much?
The amount of the deduction depends on the amount of the labour income:

Labour income	Labour deduction
€0 - €10.108	4,581% x Labour income
€10.108 - €21.835	€463 + 28,771% x Labour income - €10.108)
€21.835 - €35.652	€3.837 + 2,663% x (Labour income - €21.835)
€35.652 - €105.736	€4205 - 6% x (Labour income - €35.652)
€105.736 or more	€0

Bron: Belastingdienst.nl*

Remaining tax deductions

In addition to the deductions mentioned above, there are seven more specific deductions. For example, there are additional deductions for sustainable investments and life course leave. You can also be entitled to (additional) deductions on the income tax as a young disabled person or an elderly person. 

This table* shows the remaining tax deductions and the amounts  

Deductibles 

In addition to the tax deductions you can also be entitled to fiscal benefits with deductibles: 

Certain expenses that you have made can be deducted from your taxable income. With this you pay less income tax eventually. Your taxable income is - in other words - lowered because the expenses you have made for, for example, your education or public transport, are deducted from your income that you have made on payroll or as an entrepreneur. The items below are deductible: 

Mortgage interest deduction 

What?
Fiscal deductibles for the expenses made for the (mortgage) interest on the debt of your own residence, single payment financing expenses and periodic payments for leasehold, lease or the expenses made for the right to use someone else’s real estate. 

For whom?
Owners of their own residence.

How?
When declaring their income tax.

How much?
In 2021 you can deduct a maximum of 43% of the deductibles from the taxable income. In 2022 this percentage is decreased to 40% and in 2023 it is decreased to 37,05%. 

Personal deduction

What?
Fiscal deductibles of expenses that come from personal circumstances. 

For whom?
Everyone that has to deal with the deductibles below can be entitled to the deduction: 

• Partner alimony
• Health expenses 
• Temporary stay at home of severely disabled
• Educational expenses/study expenses (replaced by the STAP-regulation as of 2022). 
• Donations
• Loans made to a starting entrepreneur (risk capital) 

How?
Do some of the expenses you made fall under one of the categories above? Check if you meet the requirements for deduction. If this is the case you can declare these expenses with your declaration income tax. 

How much?
The deductible amounts are dependent on the expenses made and the income. 

Pay attention: with many deductibles and a low income, it is possible that you deduct more than the income allows. In this case it is a matter of a remaining personal deduction. This remaining amount can be settled in a coming year. 

Travel expense public transportation

What?
Fiscal benefits over expenses that are made for public transportation. 

For whom?
People that commute to and from their work with public transportation. 

How?
Include the made expenses in your declaration income tax

How much?
The amount you can deduct depends on the distance between your home and work and the number of days you travel to and from work with public transportation. The deductible amount (2021) you can find on Belastingdienst.nl.

Annuities

What?
Fiscal deductibles for paid annuity premiums 

For whom?
Individuals that pay premiums for an annuity product.

How?
Included in the declaration income tax. Pay attention: you will need to meet various requirements to be eligible for this deduction. 

How much?
With this calculation tool* you can calculate if/how much annuity you can deduct from your taxable income. 

Social benefits

Although benefitsare not directly a tax benefit, social benefits are provisions from the Tax Authorities, with which you can reduce certain expenses considerably as a private individual. That is why we will briefly explain what benefitsthis applies to. 

What?
A contribution from the government in the expenses for rent (rent benefit) health insurance (health insurance benefit) children (child specific budget) and/or daycare for children (child daycare benefit). 

For whom?
Everyone whose (combined) income is below a certain threshold. The amount or if you are entitled to the benefit depends on a number of factors. You can check with the calculator tool whether or not you are entitled to the benefits. 

How?
When you are entitled to a benefit you can apply for it on ‘mijn toeslagen’* You will need to login with your DigiD. Do not forget to add any changes to your situation or income in time on this website as well. 

How much?
The amount of the benefit depends on your income and whether you have a benefit partner. The lower your income the more you are entitled to in general. The calculation tool mentioned above can give you insight into the amount you could be entitled to. 

Tax partnership 

When you have a fiscal partner, then you and your partner can divide the expenses so you can maximally benefit fiscally in your income tax. Click here to read the article that Lexlupa wrote about the fiscal partnership. 

In conclusion

Conditions, deductibles, deductible percentages and exemptions with fiscal arrangements are continuously up for debate and therefore, subject to change. Check the Tax Authorities’ website, the RVO or contact your tax advisor for more information and to keep up to date. This way you make use of the fiscal benefits in a smart and legal way that applies to your unique situation. 

Fiscal benefits for private individuals: would you like to know more?

In addition to the fiscal benefits for private individuals, there are also various arrangements with which you as an entrepreneur can benefit from. Are you an entrepreneur for the purposes of the income tax? In this article** Lexlupa listed the most important benefits for you. When you want to know more about the fiscal benefits for entrepreneurs in the partnership tax, click here**. For more detailed information about the benefits regarding your personal situation you can go to the landing page for deduction and benefits on belastingdienst.nl*. Or contact us and we will gladly help you. 

Lexlupa is a multidisciplinary effort of fiscal, legal and economic experts. We give advice and guidance to companies, institutions and private individuals at life events. Lexlupa helps you to make well-informed choices in business and personal affairs, and we support you in managing your business in the best possible way. 

*Need help with navigating Dutch websites? Contact us!

** Article currently only in Dutch