In certain situations, you may be eligible for a large refund because of a home purchase. Or you may expect a large tax bill at the end of the year because you are self-employed. In either case, it may be undesirable to wait with settling your taxes until the year has passed.
You may need the tax refund in the current year. Or you don't want to be confronted with a large tax bill until you have filed for your taxes the following year. Luckily, you don't need to. The tax office has created a 'provisional tax filing' facility that allows you to pre-arrange your taxes in a temporary fashion until your taxes can be assessed with the final income data. This is the so-called provisional tax filing (voorlopige aangifte).
A provisional tax filing is not mandatory. In most cases, you will need to ask for it. When you file for a provisional tax filing, you do so on the basis of an estimate of your expected income and tax credits for the current tax year. A provisional tax filing may lead to a - provisional - tax refund or payment request. Whatever amount in provisional tax refund you received or provisional tax amount you paid due to a provisional tax filing will be settled after you have filed for your final tax filing after the tax year has concluded. A provisional tax filing will always need to be refiled when your final tax data are known.
Example - expected tax refund
You have purchased a residential house at the beginning of 2021 for which you incur expenses to finance the purchase, such as mortgage notary cost, home appraisal report, and mortgage interest charges. These expenses can be offset against your box 1 income through the so-called mortgage rebate facility. In total, you are eligible for a refund of €5,000, in this example.
You can't afford to wait to file for your mortgage rebate until next year. Therefore, you decide to use the special provisional tax filing facility to obtain your refund now. Within 6 weeks after filing you'll receive your mortgage rebate, provisionally. The rebate will be paid to you in monthly installments.
After the tax year is completed, you will file your final taxes over the past year. Again, you'll apply for the mortgage rebate, this time with your final income figures. Due to a pay raise received in April 2021, your mortgage rebate entitlement will be €5,400.
After reconciling the mortgage refund of € 5,400, you will receive an additional refund of € 400 from the tax office.
Note that you can re-issue a provisional tax filing multiple times if your income or tax credit situation changes significantly over the course of the year.
Example - expected tax payment
You quit your job at the end of 2020 to start your own sole trader business as a cryptocurrency trainer at the start of 2021. After registering your company with the Kamer van Koophandel (chamber of commerce), you're in business! You have a flying start of the business as there is a large demand for your training offering. You issue invoices of € 500 and more per training. You anticipate making (net) sales of € 50,000 in the current year!
Given that you are self-employed, no tax withholding takes place on the income from sales you (expect) to receive in the current year. You don't want the unpleasant surprise of a large tax bill next year over your income from sales you receive now. Therefore, you decide to use the special provisional tax filing facility to start paying for your tax dues now.
Based upon your expected total income of € 50,000 from your training activities, you receive a payment request from the tax office of in total € 8,000 in tax due to be paid in monthly installments. After the year is completed, you file your final (business) taxes with final profit data. It turns out that your profit was € 45,000 (after reconciling business expenses) in the current year. Your final tax bill comes down to € 6,000. The tax office will refund you € 2,000 (= € 8,000 - € 6,000) you paid in excess in 2021.
Note that you can re-issue a provisional tax filing multiple times if your income situation changes significantly over the course of the year.
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