Hi all,
I'm filling up the M form for 2011 dutch tax return. I migrated to Netherlands in 2011 and only worked here for 4 months. I worked 8 months in Singapore before that. I am trying to decide whether it's better to be resident taxpayer for 2011 or not. But for few points, it's not very clear how those points contribute to the final refund.
1. I earned my Singapore income while i was in Singapore and got my Netherlands income while here and there is no overlap during these earning periods. Am I still eligible to take option of resident taxpayer? It seems to me that this overlap is required to take the option of resident taxpayer.
2. This is related to the Algemene Heffingskorting (General tax credit). If I take the Non-Resident tax
option, am I eligible for Algemene Heffingskorting.
http://www.belastingdienst.nl/wps/wcm/connect/bldcontentnl/belastingdienst/prive/aangifte_doen_belasting_betalen_of_terugvragen/heffingskortingen_aftrekposten_2012/heffingskortingen/algemene_heffingskorting
It seems that I have to live throughout in Netherlands for 2011 (or choose resident taxpayer) to get this. But do I have to have a low income to get it? Does choosing resident taxpayer guarantee getting these tax credits. Maybe only the national social contribution part of the tax credits are given
3. Arbiedskorting - For resident tax payer option, when calculating Arbiedskorting, do I take combined worldwide income into consideration or just the dutch income only.
Thanks in advance.
Cheers
S
You are making it too complicated. You are only liable for tax on the income you made in the NL as this is when you became resident. You did not make enough income that any of these tax credits you are troubling yourself about will make a difference. You can work it out yourself on all the forms and you will see you will get taxed the same amount and refunded the same amount whatever tax status you choose. Next year use an accountant and I hope you applied for the 30% ruling.
mvn said:
You are making it too complicated. You are only liable for tax on the income you made in the NL as this is when you became resident. You did not make enough income that any of these tax credits you are troubling yourself about will make a difference. You can work it out yourself on all the forms and you will see you will get taxed the same amount and refunded the same amount whatever tax status you choose. Next year use an accountant and I hope you applied for the 30% ruling.
That doesn't seem to fit with what I've been reading. I seem to be in the same boat as I'm sure many others as well. I moved to NL in March with no overlapping incomes. Ten months lived and worked here and two months there. What's at stake here is the "keuzerecht", where if you opt for it, you are considered a taxpayer for the entire year and you are entitled to both categories of tax reductions, the social volksverzekering portion as well as the income tax reductions.
If the "keuzerecht" is not taken, you are only considered to be taxed on the time you lived and worked here, so only a portion of the 12 months. But, the downside is that you are generally not entitled to the income tax reduction portion of the overall tax reduction.
In either case, of course you are still required to pay taxes on income derived from NL, but in one case you are entitled to one portion of the tax reduction, and in the other case, not. If one does opt for the keuzerecht, then perhaps the disadvantage may be an overall higher tax rate for the year, which may be offset by the greater tax reductions? It also seems that if you do opt for the keuzerecht, all income must be added from all sources for the entire year, even income you earned in your home country while living there, whereas that doesn't seem to be the case if you split up the year by rejecting the keuzerecht.
I would expect there to be some sort of calculator where you can determine which option is more advantageous.
floepie said:
mvn said:
You are making it too complicated. You are only liable for tax on the income you made in the NL as this is when you became resident. You did not make enough income that any of these tax credits you are troubling yourself about will make a difference. You can work it out yourself on all the forms and you will see you will get taxed the same amount and refunded the same amount whatever tax status you choose. Next year use an accountant and I hope you applied for the 30% ruling.
That doesn't seem to fit with what I've been reading. I seem to be in the same boat as I'm sure many others as well. I moved to NL in March with no overlapping incomes. Ten months lived and worked here and two months there. What's at stake here is the "keuzerecht", where if you opt for it, you are considered a taxpayer for the entire year and you are entitled to both categories of tax reductions, the social volksverzekering portion as well as the income tax reductions.
If the "keuzerecht" is not taken, you are only considered to be taxed on the time you lived and worked here, so only a portion of the 12 months. But, the downside is that you are generally not entitled to the income tax reduction portion of the overall tax reduction.
In either case, of course you are still required to pay taxes on income derived from NL, but in one case you are entitled to one portion of the tax reduction, and in the other case, not. If one does opt for the keuzerecht, then perhaps the disadvantage may be an overall higher tax rate for the year, which may be offset by the greater tax reductions? It also seems that if you do opt for the keuzerecht, all income must be added from all sources for the entire year, even income you earned in your home country while living there, whereas that doesn't seem to be the case if you split up the year by rejecting the keuzerecht.
I would expect there to be some sort of calculator where you can determine which option is more advantageous.
The disadvantage of higher tax rate in resident tax payer option is due to calculating national social contribution part from combined income.
e.g. For resident tax payer, total income (T) = dutch income(D) + abroad income(A)
wage tax (WT) is calculated on combined T. I think this reduced due to proportional method for double taxing problem. Actual wage tax is WT - ( WT x A )/T. Is this correct?
but for social contribution part (33.15%) is also calculated on T. shouldnt it b on D only. Or this is the cost of becoming resident tax payer.
Thanks
-S
After re-reading the M tax form and the explanation, I think I've come to a different conclusion but there is a big question yet to be answered. If you look at question 1c, if there is no overlap of incomes of any sort during the year that one moves (away from or to NL), then you have a situation where it indicates: "De vragen die gaan over de buitenlandse periode hoeft u niet in te vullen."
I interpret this to mean that all the questions in the entire tax form pertaining to the period in which you lived outside of NL do not get answered. I think that because we are not belastingplichtige (one who is required to pay NL taxes) for a portion of the year, it is not possible to be considered either buitenlandse (foreign) or binnenlandse (internal) belastingplichtige for the portion of the year outside of NL. And, because we are not binnenlandse belastingplichtige for a portion of the year, we cannot be considered binnenlandse belastingplichtige for the entire year. I think I have interpreted that correctly.
So, it seems those who are belstingplichtige while outside of the NL for a portion of the year, or even the entire year, are the only ones with this choice, or "keuzerecht". Still not quite sure though. For those who are not binnenlands belastingplichtige for the entire year, one is not entitled to the income tax portion of the overall tax deduction. It would seem incredibly unfair, especially in my situation where I spent 10 months here to have to give up that entire tax reduction. (Apparently the discount on the "volksverzekering" would apply however.)
I just called the belastingdienst. They confirmed that because there is no income from NL during the period outside of NL, all questions regarding the period ouside of NL do not need to need to be answered. Further, there is no keuzerecht in this case, and there is also no penalty either way from not having the option. That is, you do not need to forfeit any income tax reductions, so you are elligible for both the income tax reduction portion as well as the reduction for the "volksverzekering" policy portion of the overal tax reductions. So, no worldwide incomes need be entered in the incomes section, and no worldwide incomes need be entered in the section of "incomes NL does not have the right to tax".
mvn said:
I told you that only your NL income is what needs to be considered, It is funny how the OP talks to himself and figures it out himself.
Not very nuanced, are you. But, you probably pride yourself on that. Tax topics are very nuanced. Although you wound up with the right answer, you didn't show your work, as they say in the classroom. Very often, those who are belastingplicthtig may indeed exercise their "keuzerecht" with very real tax advantages as far as deductions go, especially for the portion of the year lived oultside of NL and paying a mortgage and for those with a fiscal partner with little to no wages. While that info may not be directly applicable here, perhaps this thread may shed some light on the topic who may have arrived here by search.
You see, not too many folks simply hang out here with thousands of posts like you. So, for the vast majority who visit, do so with the intent of answering a specific question or two via searches without posing their questions. And, incidently, I'm not the OP. But, the OP and I were both under the impression that we were given an option. And, hopefully, with my "thinking out loud", I've been able to help with specific reasoning behind why or why not someone may be eligible for the choice.
What are you talking about? I didn't show my work nonsense. I am not a student taking an exam. I don't owe you anything. You take the advice as its given. You don't like it, then don't use it. Pretty simple. And if I had been just hanging around. I am pretty sure I would have been writing posts in between his or your think out loud postings. You are not the OP but you play the OP on TV, really.
