Separation allowance in the Netherlands

author: Maciej Wawrzyniak18 October 2023

Are you currently working in the Netherlands? Are you wondering whether you are entitled to an extra tax refund from the Netherlands due to separation pay? What is this separation payment anyway? Read our article to find out what the Dutch separation payment is and how you can apply for it.

Expatriation allowance in the Netherlands - what is it?

Separation allowance from the Netherlands is a tax relief you can receive for having a fiscal partner. We can compare it to the Polish joint settlement for spouses. The Dutch name for the separation allowance is algemene heffingskorting.

The main purpose of the Dutch separation payment is to support people earning lower wages who have a dependent fiscal partner. If your current place of work is in the Netherlands, the separation payment will be part of the tax you have paid, which the Dutch tax office has not calculated in the case of an individual settlement.

Who is entitled to the expatriation allowance - the Netherlands

This type of tax relief can be claimed by people who are in a formal relationship and who are registered together at the same address, but not only. See who else is eligible for the expatriation allowance in the Netherlands. In other words - who can become your fiscal partner so that together you can claim extra money and a higher Dutch tax refund.

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Who can be your fiscal partner?

  • Husband or wife.
  • A person with whom you have entered into a civil partnership and the notarial deed certifies cohabitation.
  • A person with whom you have a child in common.
  • A person who is a co-owner of the flat/house in which you reside.
  • A person who is a pension beneficiary for you.

It is important that partners living together are registered with the local authority at the same address.

Fiscal partners can also be siblings. However, a certain condition must be met, namely that they must be registered at a common address, but a different one to that of their parents. In addition, they must be co-owners of the house or flat in which they currently reside.

When applying for the tax credit, you file two separate tax returns - for yourself and your fiscal partner. The tax office in the Netherlands therefore receives two returns indicating your relationship to your fiscal partner, identifying yourself with a BSN number. Both you and your fiscal partner will receive separate Aanslag tax decisions from the office and your affairs will be treated separately. Therefore, any account registrations, updates to your Dutch address or appeals against decisions should be submitted separately for each taxpayer with a BSN number.

Expatriate Netherlands - terms and conditions

The most important condition you need to meet in order to apply for separation pay in the Netherlands is the so-called 90% condition. What is this rule? The 90% condition is that the income earned outside the Netherlands must not exceed 10% of the total worldwide income. It is important to bear in mind that this percentage refers to the total income of the fiscal partners. In addition, it is necessary to notify the tax office in the Netherlands of all income earned - this also applies to income earned outside the Netherlands, for example in Poland.

Another mandatory point to fulfil when you want to apply for Dutch separation pay is to have a BSN number. A person legally employed in the Netherlands will have such a number. However, what if your fiscal partner is not working in the Netherlands and has not been issued with a BSN number? In this case, you must apply for a BSN number by submitting a written application to the Belastigndienst tax office. It can take up to six months to process such a letter. Only when the Dutch officials have granted it, can you - together with your fiscal partner - apply for expatriation allowance in the Netherlands

You can apply for Dutch expatriation pay up to five years back, even if you have previously filed accounts on an individual basis. Your fiscal partner will receive the money that you will be entitled to because of the separation payment.

In summary - to apply for the separation payment in the Netherlands, you must meet the following conditions:

  • condition 90%,
  • informing the Belastigndienst tax office of all income received,
  • having a BSN number (both you and your fiscal partner).

Expatriation allowance in the Netherlands - what documents do you need?

In order to apply for separation allowance from the Netherlands, you and your fiscal partner should prepare the relevant documents. You will definitely need your fiscal partner's BSN number (the Dutch equivalent of a NIP number). The second necessary document to apply for the Dutch expatriation allowance is the Jaaropgave, which is the annual tax card you will receive from your employer.

How long do you have to wait for the expatriation allowance from the Netherlands?

You can wait between two and twelve months for a decision on Dutch Expatriation Allowance. However, it is also up to you how long you have to wait. The sooner you submit all the necessary documents, the sooner the office will start processing your case.

How much separation pay is in the Netherlands

The maximum amount of Dutch separation pay that you and your fiscal partner can receive varies from one tax year to the next. It also depends on your income and the advance payment you have made to the tax office in the Netherlands for the work you have done in the Netherlands.

To find out exactly how much your expatriation allowance is in the Netherlands, it is advisable to contact the tax office. The advisors working there consider each application individually. You will definitely receive an accurate calculation of your Dutchseparation pay.

Expenses for children in the Netherlands

If you are employed to work in the Netherlands, you can also apply for child allowance. You will be entitled to child's separation pay in the Netherlands if you meet the following conditions:

  • The child must be under 12 years of age on 1 January 2022.
  • The child has been registered at the same address with you for at least six months (six months) in the past tax year.
  • Your income was higher than €4,900 (ask the Dutch tax office for the exact amount) per year.
  • If you have a fiscal partner, the Dutch child tax credit will apply to the person with the lower gross income.

It is worth knowing that officially there is no such thing as child separation allowance in the Netherlands. The term is simply used as a synonym for child tax credit, which you as a Dutch taxpayer are entitled to once you meet the conditions set out above.

Remember also that by choosing the option to settle your Dutch tax with your fiscal partner, you lose the possibility to get a tax credit for a child living in Poland. In such a situation it is best to simply recalculate which settlement method will be the most beneficial for you.

Dutch settlement - will it be granted all the time

This allowance used to be much more popular because of the higher amounts granted by the Dutch tax authority Belastigndienst. However, the amount of separation allowance is getting smaller and smaller every year. See how it has changed in recent years:

  • 2017 - €902
  • 2018 - €755
  • 2019 - EUR 661
  • 2020 - EUR 543
  • 2021 - EUR 379

By 2023, the amount will be reduced to zero and the low-income partner tax credit will be cancelled. Why?

The tax authority in the Netherlands argues that the allowance does not encourage the labour activation of unemployed partners in the country or abroad. The authority has adopted a strategy of increasing the tax-free amount for the taxpayer and higher tax credits, for example the Arbeidskorting (an employee tax credit that reduces the tax to be paid).

Are you curious about how much tax refund you will receive? Our Dutch tax calculator online combines innovation with intuitiveness. This tool was designed to simplify the tax calculation process, with features specifically tailored for those working in the Netherlands. Regardless of the type of tax form you choose, whether it's an M-form, C-form, or P-form, our system is equipped to tackle any challenge. Join the ranks of satisfied users who have already managed to try the tool!