Ultimate advantages of being in tax partnership

by Genie Ijzersmid
3 min read
Handshake surrounded by flying papers

Being tax partners in the Netherlands helps you to save money. We have already explained who can become your tax partner. Now, learn more about the advantages of tax partnership.

Tax partnership brings you certain benefits as a taxpayer. If you had a tax partner throughout the previous year (or even during some months of the year) inform your tax advisor. This will affect the amount of tax you will have to pay or be refunded.

Splitting income and deductible items

When filing the tax return, you may split income (also known as apportion) and deductible items between you and your tax partner. If you have higher income, you may also deduct some of the expenses.

There are certain limitations to the apportioning. The following income and deductible items may be divided between yourself and your tax partner:

  • the difference between the income and the owner-occupied home's deductible items
  • deductions for little or no home acquisition debt;
  • gains from interests;
  • the joint basis for savings and investments;
  • payment and obligations regarding maintenance;
  • expenses for supporting children who have not reached 30 years;
  • specific medical expenses for one of the tax partners or children;
  • expenses associated with taking care of disabled children, brothers or sisters;
  • expenses related to studies and education;
  • donations and charity expenses;
  • costs for a nationally listed building;
  • losses on venture capital investments;
  • personal allowance remainder for previous years.

The following income and deductible items may not be apportioned between yourself and your tax partner:

  • profits from commercial activities;
  • your wage, pension or benefits;
  • the allowance for public transport;
  • extra income from freelance jobs, artistic or other activities;
  • regular social payments;
  • expenses and negative expenses for income provisions (e.g., annuity premiums);
  • the joint basis for savings and investments in the year when of the tax partners died;
  • the joint basis for savings and investments in the year when you emigrated or immigrated and did not meet one of the additional conditions;
  • negative personal allowance.

Threshold amounts

If you had tax partners throughout the year, you would have to calculate the threshold amounts for deductible items on the basis of your joint income.

For instance, if you did not have a tax partner and incurred medical expenses you would like to deduct, this would be possible if they exceed the threshold amount. Let’s imagine you have a threshold income of € 23,000. In this case, the threshold amount for educational expenses is 1.65% of your threshold income. That is € 379.

At the same time, if you had a tax partner throughout the year and want to deduct the above-mentioned expenses, you would have to take into account the threshold income of you both. For example, your threshold income is € 23,000 and your partner's is € 15,000. The threshold amount for educational expenses is 1.65% of the combined threshold income. In our case, your joint threshold amount for educational expenses will be € 627.

These examples show the obvious advantages of the tax partnership. Learn the benefits of the tax partnership and file your tax return accordingly.