First Time Filing Blues – How to File Your First Income Tax Return in the Netherlands

As a newcomer to the Netherlands, you probably have a lot of questions. From housing to jobs to daily finances, moving comes with many unknowns. One of the biggest questions, especially as a new arrival to the country, is how to file your first income tax return.

Filing your year-end taxes can already be challenging, and the fact that all the information, important forms, and notifications are only available in native-level Dutch makes being a new tax-payer that much more complex.

One piece of good news is that the Dutch tax office does allow you to file your taxes online using the DigiD system. In fact, you’re suggested to get your DigiD number soon after arriving in the country. The downside, however, is that the Dutch tax system itself doesn’t accommodate new arrivals due to their first year being what’s called a broken tax year.

Luckily, many expats have gone through this very tax hassle, and have troubleshot for you. Better yet, there are services, such as Blue Umbrella, that help expats file their tax returns and manage other tax-related tasks easily and seamlessly.

The permanent resident (or normal) processes will lead to rejection

It’s important to know that the first time you file your tax return, you may end up frustrated. Don’t worry, every expat has been through it.

The DigiD tax filing system is designed for permanent residents, and is therefore comprehensive but potentially challenging. As a newcomer, it’s likely that you enter the system and fill out the wrong form, or navigate the system incorrectly. Furthermore, there’s not really any notification to let you know of your “mistake” or that you have to follow a different process.

The Dutch tax office will surely reject your tax return filing if you’ve decided to try to file your first-time tax return online. They’ll send a rejection letter in the mail, along with a request to fill out a 59-page booklet (the M form) that you need to complete if you want to file with an incomplete tax year.

Sole traders and businesses

Additionally, if you are a sole trader or a sole proprietary business owner, you will have to fill out another 24-page booklet, also in Dutch. Of course, the explanation of these forms, as well as the forms themselves, will be in Dutch.

Know your official date of arrival

In the Netherlands, a full tax year starts on 1 January and ends on 31 December. The Dutch tax office is interested in your period of residency the first time you file for your tax return. One of the main reasons why your first time using the DigiD system might end in rejection is because you’re filing in a broken tax year, meaning you arrive after 1 January and only have a partial year to present to the tax office.

To clarify, the official date of arrival does not mean the date you landed and marveled at your gezellig (a Dutch word that means “cozy” and a whole lot more) new home. The Dutch tax office asks for the date you register with your municipality (“gemeente” in Dutch), not your first day living under sea level.

It’s important to remember that when filing your taxes, stick with your municipal registration date. If you don’t, you may also receive a rejection, as your unofficial date of arrival may be very different then the official one the tax office wants you to use. For instance, if you landed in December 2019 and registered in 2020, and you file for both 2019 and 2020, you may end up using the wrong forms and overall file incorrectly.

You can appeal a rejection from the tax offices, and get the dates corrected, though as a new arrival, getting it right the first time is always a better practice.

How to make tax filing easier

If the distinction between which dates to use in your tax filing is already making your head spin, then you are in luck. Taxes have long been a puzzle for expats in the Netherlands, which is why services such as Blue Umbrella come in such handy. As a new arrival, doing your tax return with a service like Blue Umbrella can ensure that your first time filing is a success.

With in-person service and an online platform, the expat tax service Blue Umbrella helps you file your income tax return using a tax questionnaire that is simple and – most helpful of all – in English. You can also try Blue Umbrella’s income tax calculator to learn how much tax you pay on your income. It is available for those who are employed and self-employed.

To get started on your first income tax return, sign up online at www.blueumbrella.nl. If you have questions about their questionnaire, expat taxes in general, or are a small business owner looking for support, email the Blue Umbrella team at [email protected].