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Tax to be paid back over 2014 – headlines (October 31, 2014)

The above message is not the digital Halloween version of today’s world, but instead of the Halloween party this is reality. What is the situation?

Basically it is simple, we live in the Netherlands in a democracy where every politician can make a claim to what this person thinks should be in the tax system. Most of the time this is more to make a statement, sometimes it is a well thought plan. However, as everything needs to be done budget neutral, it is one step forward, one step back.

The result is that some persons in society received tax breaks, this needs to be paid by others. Others is in 2014 the higher earning employees and the higher earning employees benefitting from the mortgage deduction.

The labour deduction reduces when the income exceeds a certain amount. The same for mortgage deduction, the Government would like to limit the deduction for higher earning employees. Hence you can no longer receive a refund at 52% tax back, but it is no limited to 51,5%. Next year 50%, then 49,5% etcetera.

Due to the number of changes and due to the fact that most changes were made extremely late in the season, the Dutch tax system was not able to cope with these changes and some have not been implemented in the system.

That implies that persons receiving a 2014 preliminary refund, currently receive this refund based on an incorrect base. The result is that tax needs to be paid back when the 2014 income tax return is filed in 2015. The amounts expected to be paid back are between EUR 300 and EUR 700 depending on your income and mortgage details.

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