Two weeks ago (when this article comes out) I did my taxes for 2018. I found out, the government owes me a nice chunk of money! On my tax declaration I get to receive almost 2,000 euros back.
Taxes in The Netherlands
Earlier I wrote about taxes here in The Netherlands. We are a country that likes to tax individuals and still is a tax haven for multinationals. Something about that doesn’t feel right, especially since I know that every additional euro I earn over my current salary is taxed at 49% and will be taxed at over 50%+ soon.
So we basically tax individuals on their income (ok), the virtual income they receive from owning their primary residence (uh, what?), and their wealth (that’s fine). Let’s keep the tax on a substantial interest in a limited company out of scope here.
So we get taxed hard on income, and then also on our primary residence. The way the latter works is kind of complicated, but just assume you have to add a small percentage of the value of the home to your taxable income every year.
Variable Income Taxation
One of the reasons I get back some money is that my income was variable. I do have a regular monthly salary, however, I also receive the occasional bonus. Then next to that, in 2018 I switched jobs and received a large cash payment from my old company, paying out my leftover holidays.
The way my income tax withholdings are calculated is they take the monthly payment, multiply by 12, then look up the applicable tax rate for the yearly amount, and tax you on that.
Since we have a progressive tax system, when I receive a bonus and my income maybe is double what a regular month is, the withholdings are a bit too high too. In the end, when you finish your tax declaration, that is evened out.
Long story short, due to my variable income consisting of bonuses and one-time payments I paid too much in income taxes during the year.
Then, of course, we get some deductions. It seems impossible to create a tax system that works without rules, exceptions, and exceptions to those exceptions.
I can deduct some expenses that come with owning a home as well. For one, I can deduct the mortgage interest I paid. I’m even allowed to deduct one-time expenses paid when buying or refinancing a house!
Among the costs to refinance there were the notary, appraisal, and an interest penalty I had to pay the previous bank. All of these are deductable as well!
So in total, everything combined made that I will be receiving 2,000 euros, probably somewhere in June.
Did you already do your taxes? What do you owe or get back?