On 1 March next, the digital income tax return round 2025 (IB 2024) will start. In this tax return letter, you will find the most salient issues you should be alert to when filing the 2024 IB return. We focus on the changes from the 2024 Tax Plans and some of the things you should be extra alert to each year.

1.1 Invitation to file declaration still digital and by post
You recently received the invitation to file the 2024 personal income tax return. That invitation still comes both by post with the familiar blue envelope, and digitally via your personal Messages Box on MijnOverheid. In time, the paper invitation will be completely replaced by the invitation via the digital message box.

1.2 Have the pre-completed return checked and completed
The Inland Revenue already completes much of the tax return. For example, the annual statements of your wages, pension, annuity payments and other benefits have already been filled in. This also applies to the WOZ value of your own home, the deductible mortgage interest and the balance of mortgage debt. Bank balances and the (value) of other assets in box 3 are also already filled in.

Check the pre-filled details carefully, especially if your income situation has changed. Have you refinanced your mortgage? In that case, the interest deduction changes and you probably incurred additional deductible expenses. Moreover, even the tax authorities sometimes make mistakes or the data are incomplete. You are and remain responsible and liable for the tax return, even if the Tax Administration has included incorrect data. In addition, you must complete the tax return with the details that have not been filled in in advance and that apply to your income and capital situation. These may include deductions such as gifts, medical expenses and partner alimony paid.

1.3 Self-filling difficult and/or too much hassle?
Despite the pre-completed tax return, you may still find it very difficult to fill in the 2024 IB return completely and correctly yourself or find it too much of a hassle. Let us take care of your tax return. We will be happy to do it for you. You provide us with the relevant details for your 2024 income tax return and we will check the pre-completed details and complete the return where necessary. Submit the tax return before 1 April 2025 in, then at least you can be sure that you will be before 1 July 2025 get notice from the Inland Revenue.

Below, we have listed a few things that you may not immediately think of when collecting the data needed to compile your 2024 income tax return.

2.1 Owner-occupied house lump sum
The addition for the owner-occupied home (the owner-occupied home lump sum) is 0.35% over the WOZ value, provided that the WOZ value is between €75,000 and €1,310,000. Above that, the flat rate is 2.35%. You only owe this rate for the WOZ value above €1,310,000. The owner-occupied home fixed rate 2024 is calculated over the 2024 WOZ value of your home with reference date 1 January 2023.

2.2 Division of owner-occupied home and mortgage interest deduction
Do you have a mortgage for a property that is your primary residence? If so, you can deduct the interest. Did you take out a new mortgage for the first time on or after 1 January 2013? If so, you must additionally repay this owner-occupied home debt to get interest deduction. Your mortgage debt decreases annually by repaying it. You will therefore pay less interest each year and therefore have less interest deduction. You can deduct mortgage interest in 2024 at a rate of 36.97%. Even if you have income taxed in the highest tax bracket. The income threshold at which the first rate bracket of 36.97% changes to the second (and highest) rate bracket of 49.50% in 2024 is €75,518. Although the deduction rate is 36.97% regardless of your income, it is still very important that - if you have a partner - you declare the owner-occupied home and mortgage interest deduction to the right person in the 2024 IB return. You can read how this is done below.

How to distribute?
Was your income higher than €75,518 and your partner's income lower than this amount? In that case, it is probably most advantageous to claim the owner-occupied home lump sum and mortgage interest deduction from your least-earning partner. Firstly, this means the owner-occupied home lump sum is taxed lower, at 36.97% instead of 49.50%. However, you gain the most benefit from the higher general tax credit (in 2024: up to €3,362) that your least-earning partner gets through the mortgage interest deduction. This is because this general tax credit decreases by 6.638% from an income of €24,812. At an income of €75,518, this tax credit is completely phased out to zero. If you have an income above this income limit, you will therefore have no general tax credit. However, does your partner have an income between € 24,812 and € 75,518 and do you declare the deemed owner-occupied home for him/her and deduct the mortgage interest? Then his/her income decreases and thus the entitlement to general tax credits increases again. Thus, the lower taxed owner-occupied home lump sum and the higher general tax credit in the case of your least-earning partner thus yields more than if the lump sum and deduction are claimed in the case of you as the most-earning partner with an income in the second rate bracket.

Partner with little or no income
Does your partner have no or little own income and was born before 1963? Then the general tax credit up to a maximum of €3,362 can be paid to him or her, provided you owe sufficient tax. Was your partner born after 1962 and you have income in box 2 and/or box 3? Then it may make sense to allocate part of that income to your partner, giving him or her income on which tax is due, from which the general tax credit can be deducted. This way, your partner can still use his/her general tax credit. Moreover, you owe less tax because you have allocated part of your income to him/her. So you owe less tax together.

Tip
It is also wise to have a quick check of the provisional 2025 income tax refund or assessment. It may need to be adjusted accordingly.

2.3 Make declaration of (amended) owner-occupied home loan with family or bv
Did you buy a property or remodel your home in 2024 with a loan from your family, a third party or your own private limited company? If so, you can only deduct the interest from your Box 1 income if you report the details of that loan in the 2024 IB return. This information reporting requirement for loans from non-accounting agents only applies to loans taken out on or after 1 January 2013 on which annual repayments are mandatory. Has the interest rate of this loan changed in 2024 or has the loan been renegotiated? If so, you must also declare this in your 2024 IB return.

2.4 Deduction of no or small owner-occupied home debt
The phase-out over 30 years of the scheme, whereby you do not have to add owner-occupied home lump sum to your income if you have no or only a small mortgage, started in early 2019. This occurs if the owner-occupied home lump sum exceeds the interest and/or finance charges you paid. Until 2019, you did not have to add anything then. But since then, you have to add an extra 31/3% every year. In 2023, that was 16.67% of the balance of the owner-occupied home lump sum and deductible interest and costs. In 2024, it is 20% of this balance.

2.5 Deduction of surrendered FOR into annuity
You can no longer build up a pension in the tax-deferred retirement reserve (FOR). Did you build up a FOR in the past? Then you will have to settle this with the tax authorities at some point. The ultimate moment to do so is when you cease your business. Then you will have to add the reserve to the profit. And then the full amount of the accumulated reserve will be subject to income tax. Fortunately, you can stipulate a deductible (bank) annuity for the amount of the built-up retirement reserve, so that on balance you do not owe any income tax when you cease trading. After all, the amount by which the FOR decreases is taxed, but on the other hand, the premium for the annuity is deductible. Of course, you must then have sufficient liquid assets to be able to pay off the amount of the retirement reserve. If that is the case, you can still pay off (part of) the reserve up to 1 July 2025 deposit into an annuity and still deduct it in your 2024 income tax return.

2.6 Deduction of annuity premiums
Do you have a pension shortfall? If so, you can arrange supplementary income for this. For example, by taking out an annuity policy with an insurer or an annuity bank savings product with a bank. The annuity premiums you paid in 2024 can be deducted in your 2024 income tax return.

Tip
The deduction of annuity premiums is not limited to 36.97%. With sufficient income in the highest bracket
So can you deduct this premium at a rate of 49.50%!

2.7 Gift deduction
Donations to charities with an anbi status are deductible if you can prove that you have actually paid the donations, for example with a transfer or receipt. Ordinary donations are deductible above a certain threshold amount that depends on your income. The Inland Revenue has already pre-filled the threshold amount. Periodic donations are fully deductible, but in that case you must meet certain conditions. The Inland Revenue has registered all charities with an anbi status. Click here To check whether the charity is an anbi. Cash donations are no longer deductible.

Tip
Do you make the same donations to the same charities every year? Then consider making it a periodic donation. After all, then your entire donation is deductible and not just the amount above the threshold.

2.8 Substantiate gifts in kind
From 2024, you must be able to substantiate donations in kind worth more than €10,000 (per taxpayer) per calendar year with an independent valuation report or invoice. This requirement also applies to a waiver of a claim relating to an asset in kind. Such waivers are classified as gifts in kind. As a result, it is not possible to escape this burden of proof via this route. Can you not substantiate the gift in kind with a value higher than €10,000? Then you cannot deduct the value of the gifts in kind.

2.9 Double exemption for policies on request also in the absence of double beneficiaries
Are you tax partners of each other and want to use the double exemption on a so-called Broad Revaluation Policy, Home Equity Insurance (KEW), Home Savings Account (SEW) or a Home Investment Account (BEW) during your lifetime? If so, you must both be beneficiaries. If you and your partner have forgotten about the double beneficiary, you can still use the double exemption by filing a joint request with the IB tax return, as a result of which each of you receives half of the benefit. You then each use your own exemption.

2.10 Check interest deduction after temporary letting
Do you have a non-sold property that you are now temporarily renting out? After the period of temporary letting, the right to interest deduction revives for the remaining period, during which the interest deduction is still allowed. That term is 3 years. After the temporary letting, check whether that period has expired. Has it? Then you are no longer entitled to interest deduction.

2.11 Excessive borrowing from your bv?
Are you a director-major shareholder (dga) of your own bv? And have you borrowed a lot from your own bv (not being for your own home*)? If so, the following is of interest to you. Late last year, the Inland Revenue checked whether you and your partner have debts with your own bv that exceed €500,000. If so, in 2024, the excess above €500,000 will be taxed as a substantial interest benefit with Box 2 taxation. Box 2 has two rate brackets since 1 January 2024: a first bracket with a rate of 24.5% for box-2 income up to €67,000 and above that a rate of 33%. Do you have a tax partner? Then the low box-2 rate applies up to €134,000 if there is an equal division between you and your partner.
Does your bv lend to your (grand)children or to your (grand)parents or those of your partner? Then the €500,000 limit also applies to these related persons and their partners. If they themselves do not have a substantial interest in your BV (5% or more), the tax on the excess above this €500,000 will be with you. If they do have a substantial interest themselves, the levy will take place with the borrower/related person themselves.

*) Please note
Are you entering into a home equity debt with your own PLC? Then make sure you provide a mortgage right to your own bv. Otherwise, this debt will not fall under this exception!

2.12 Assets in box 3
Until 2027, the Box 3 tax is calculated using flat rates of return for the three categories 'bank and savings deposits, 'other assets' and 'debts'. For 2024, the flat rate for the 'other assets' is set at 6.04%. For 'bank and savings deposits' and 'debts', the rates have been provisionally set at 1.44% and 2.61%, respectively. Investment assets such as a securities portfolio, cryptocurrency or real estate, are thus taxed more heavily than bank and savings deposits. Incidentally, the latter category also includes shares in a reserve fund of an Association of Owners (VvE) and a trust account with a notary. Claims and debts between you and your fiscal partner or between you and your minor child no longer need to be declared in the personal income tax return.
The box-3 tax due (36%) on the benefit from the box-3 assets you declared in your 2024 income tax return is thus calculated under the current statutory scheme that is based on the flat rate of return for the three categories of assets. However, your actual return on these assets may be lower. If this is the case, you can use the form 'Opgaafafgave werkelijk redendement' to have the tax authorities recalculate the box-3 levy. However, you must be able to prove how much your (lower) actual return was in 2024. The form will be available from July 2025.

Tax-free assets
The exemption in box 3 (the tax-free capital) remained €57,000 per taxpayer in 2024. Do you have a tax partner? If so, together you will have an exemption of €114,000. Do your assets remain below the amount of the levy-free assets? Then you do not have to declare your assets to the tax authorities and nothing will be taxed on you in Box 3.

Note: exception!
Are you entitled to rent allowance and do you have box-3 assets? In that case, a different rule may apply to you. This is because the assets test in the income-related schemes is based on the capital yield base without deduction of the tax-free assets. This means that you still have to fill in the assets in your IB tax return if your Box 3 assets without application of the levy-free part exceed € 36,952 (per allowance partner). This asset limit is only relevant for the rent allowance, as no (childcare allowance) or, on the contrary, higher asset limits (care allowance) apply to other income-dependent schemes.

Correct distribution of box-3 assets
Do you have a tax partner? In that case, it is important to divide the assets between you and your partner in the most favourable way. So here too, you can benefit by dividing the assets in such a way that your partner makes maximum use of the general tax credit (see under 2.2).

This Declaration Letter reflects the state of laws and regulations until 18 February 2025. Although the utmost care has been taken with respect to the contents, we cannot be held fully liable for any (printing) errors and omissions. The editors, publisher and distributor hereby exclude liability for these. Please feel free to contact us at any time for clarification.