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Partners' Income Allocation for Amsterdammers

Amsterdammers: split income with partners for lower income tax in box 1 & 3. Local tips via Juridisch Loket Amsterdam. Optimize your tax burden! (118 characters)

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Partners' Income Allocation

For Amsterdammers, partners' income allocation is a smart tax arrangement under Dutch family law and tax law. Spouses or tax partners in Amsterdam can divide income from work, high housing costs, and other sources to reduce their tax burden. This is done through the income tax return and depends on partnership status and marital property regime. In this article for Amsterdam residents, we explain the rules, with local examples and tips, including references to the District Court of Amsterdam and Juridisch Loket Amsterdam.

What is partners' income allocation?

This allocation allows tax partners to assign incomes for income tax (IB) purposes, particularly in box 1 (work and home) and box 3 (assets). In Amsterdam, where mortgage interest deduction often plays a major role due to sky-high house prices, it helps optimize tax brackets and maximize tax credits. Read our article on marriage and taxes for the basics.

Upon marriage or registered partnership, tax partnership applies automatically. For cohabitants in Amsterdam's vibrant neighborhoods, there are strict requirements. Without allocation, incomes remain separate, leading to unnecessarily high taxes in an expensive city like Amsterdam.

Legal basis

The arrangement is laid down in the Income Tax Act 2001:

  • Article 2.1 of the Income Tax Act 2001: Definition of tax partnership.
  • Articles 2.13 and 2.14: Allocation of box 1 incomes (work and home).
  • Article 2.36: Allocation of deductions.
  • Article 3.111: Allocation of savings and investment accounts in box 3.
These rules are supported by EU law and Supreme Court rulings, such as 'X and Y' (HR 2015), and are relevant for proceedings at the District Court of Amsterdam.

Different allocation mechanisms

Tax partners in Amsterdam can choose from various options. Overview in table:

MechanismDescriptionConditionsBenefit for Amsterdammers
Box 1 income allocation50/50 or adjusted assignment of work and home incomes.Both partners have income.Better brackets and credits with Amsterdam housing costs.
Assignment of periodic paymentsTransfer alimony or benefits.Periodic, for maintenance.Deductible for payer, taxable for recipient.
Gift allocationTax spreading of gifts.No exclusive marital conditions.Lower gift tax.
Box 3 allocationSplit assets as of January 1.Tax partnership.Lower levy with unequal savings pots.

Conditions for tax partnership

You must be a tax partner:

  1. Automatic: Marriage or registered partnership.
  2. Cohabiting in Amsterdam: Meet requirements such as:
    • Joint address for at least 6 months (e.g., in De Pijp or Oud-Zuid).
    • Dependent child or joint mortgage via Municipality of Amsterdam.
    • Notarial cohabitation agreement with liability.
Divorce ends this as of the reference date.

Practical examples for Amsterdam

Example 1: Box 1 allocation
Partner A: €70,000 salary (typical Amsterdam tech job), B: €25,000. Without allocation, A falls into higher bracket (37.07% vs. 36.93% in 2023). With 50/50 (€47,500 each), they save €600, plus tax credit for B.

Example 2: Alimony post-divorce
Ex pays €15,000 alimony. Deductible for payer (box 1), taxable for recipient – crucial after Amsterdam divorces.

Example 3: Box 3
A: €250,000 savings (from home profit), B: €0. Allocation halves the levy (approx. 1.2% notional).

Rights and obligations

Rights:

  • Choose the most advantageous allocation on joint return.
  • Access via Tax Authority app.
  • Objection: Hearing and appeal at District Court of Amsterdam.

Obligations:

  • Joint return (unless excluded).
  • Accurate information; penalty up to 100% for fraud.
  • Marital conditions may limit allocation.

Frequently asked questions

Am I a tax partner with my Amsterdam cohabiting partner?

Yes, if quality requirements are met: joint address, child or mortgage. Check Tax Authority tool or Juridisch Loket Amsterdam.

Can I change the allocation after filing?

No, binding for the year. Supplementary return up to 5 years, with risk of additional assessment.

Does this apply to registered partnerships?

Yes, equal to marriage. More info.

Partner abroad?

No partnership, unless both NL-tax liable. See treaties.

Tips for Amsterdammers

  • Plan smart: Use Tax Authority trial calculation for optimal allocation.
  • Marital conditions: Opt for limited community for flexibility. Read more.
  • Divorce?: Get free advice from Juridisch Loket Amsterdam or a city notary.
  • Local advice: Contact Municipality of Amsterdam for mortgage-related tips.