Dutch tax payers with substantial study costs may get a substantial relief by a tax deduction optimization. If you have or had expenses for a profession or to obtain a new skill, and from which you planned to derive future income, you can often deduct the expenses against a high income tax rate.
Several conditions apply, next to the fact that the expenses should be made with the expectation to derive future income with or from it. Another condition is that you have no entitlement to a study grant by the Dutch government (e.g. via DUO). Examples of deductible school expenses are college subscription fees, course or exam fees and expenses for necessary schooling material. Other costs such as travelling costs or costs of a tablet are not deductible.
What will be the benefit? The total tax benefit depends on the tax rate applicable to your specific tax position. Since the Dutch Box 1 income tax system has progressive tax rates, it may be that tax payers with a higher income may profit even more from the deduction. Also, there is a threshold of EUR 250, and a ceiling of EUR 15,000 per tax year. Do note that a reimbursement by an employer will be withheld from the deductible amount.
It pays to file your tax returns
If you indeed have school expenses, let us check if a deduction may be possible for you (also for previous years!). Filing or refiling your tax return may consequently lead to a refund. This is also the case if you had no income but you did have school expenses in a certain year. Deducted expenses will lead to a future deduction (to be carried forward) so that you will not miss any deduction possibilities.
Income tax entrepreneurs can deduct their school expenses as well. In that case there is no threshold, no maximum and no further restrictions. As such it is often more beneficial to make (and deduct) school expenses in a year that you are an entrepreneur. If you are a corporate entrepreneur (e.g. with a limited liability company) deductions or reimbursements are possible as well. Reach out to us if you wish to know the specifics. There may be some wage tax attentions points.
It is expected that in or per 2021 the current deduction possibilities for school expenses will change or be abolished. It is likely that it will then be replaced by a subsidy arrangement given a range of EUR 1,000 – 2,000 of subsidy p.p. Should you plan or expect really substantial study expenses, it may be a consideration - or a challenge - to start or complete the lessons still in 2020.
Reach out if you have any questions!