In September, the Dutch government announced its budget for next year, including some alterations to the tax regulations. Here’s what you need to know.

‘Because there is still no official coalition and the government is acting in a caretaker capacity, there is not much change this year,’ said a spokesman for tax adviser Blue Umbrella. ‘However, there are some alterations that could be very important for expats in particular.’

In general, if your income is more than €68,507 a year, then certain costs that you can offset will go down – most importantly, mortgage interest tax relief, which is limited to 40% of the amount paid.

There are some general measures to stimulate green investments for business, a slight claw back on perks for electric cars, and various modifications for offsetting corporate tax and combattng business tax avoidance.

Otherwise, as part of previously announced plans, freelancers will be able to deduct slightly less as a tax credit (€6,310 instead of €6,670 in 2021) but the main tax bands and rates remain the same.

Blue Umbrella’s experts have weeded out the top five changes likely to affect expats in the tax regulations that are expected to come into effect from January.

Working from home

Currently, a tax allowance exists so that employees of a firm can claim €0.19 per kilometre travelled on their way to work via private transport and can offer employees a tax-free allowance to set up a home office. Next year, there will also be a new working-from-home daily subsidy.

Employers will be able to offer their staff a reimbursement of €2 a day in their pre-tax salary for working from home, to cover additional costs like drinks and heating, based on calculations from the family spending institute (Nibud). This does not have to be full time work but can be adjusted for a certain number of days per week, to keep the working-from-home benefits revealed by the coronavirus.

Study costs

Currently, if you incur more than €250 in study costs, related to a job that you have or will have, these can be deducted against income or future income. This system will change from next year into a new one where you can request a subsidy for study costs from March 1 2022.

Blue Umbrella experts expect that it will work something like DUO allowances, based on income levels, but the fine detail has not yet been announced. If you want to claim study costs under the current system, it may make sense to pay for a longer-term course in 2021 and claim the deduction now!

Corona support ends

From October 2021, government business support for corona ends, and everyone who has asked for a postponement of outstanding tax will need to create a personal payment plan to pay it back. This might include VAT, wage tax as well as other taxes, and you have 60 months to pay back these debts (with the first payment due by October 31, 2022). If you pay back this year, the interest rate is just 0.01%.

Next year, however, interest rates will go up on these debts: from January 2022, the interest is 1%, from July it will be 2%, from January 2023 it will be 3% and from January 2024 it will be back to the old level of 4%.

Child benefit changes

A type of child benefit called IACK (income-dependent combined tax credit) is based on the parents’ income. Previously, if one partner was abroad, then this income was not counted. However, from 2022, the Dutch tax office will also consider income from a partner who is based abroad in determining the level of this benefit.

The maximum benefit will also be reduced by €318 annually in order to help fund nine weeks of parental leave after the birth of a child. This measure will come into effect from August 2, 2022.

Stock options for employees

An important measure to help start-ups, which might need expensive employees but be low on cash, is a change to stock option rules. It has traditionally been difficult in the Netherlands to pay employees (partly) in stock options because they are immediately taxed as a form of salary if they are converted into shares.

From next year, the tax will only be levied once the shares can actually be traded, and so money becomes available. This will also take account of restraints in people’s contracts, says a Blue Umbrella expert, so if you are contractually forbidden from selling for five years, you do not have to pay the tax before then, even if the company has floated.

For more advice on your specific situation, and how you might be affected by changes in 2022, contact Blue Umbrella for personal, cost-efficient advice.