The tax world never stands still, and as a taxpayer it is often difficult to keep informed of everything. Therefore, we have briefly summarized the main points of all the changes and relevant issues that may be of interest to your personal situation in order to end the year fiscally in an optimal way and get 2024 off to a good start. Do not hesitate to contact us if you have any questions, we are happy to look at your personal situation together and thanks to our expertise we will make sure you don't pay more taxes than needed.
Important: Any information found in this article is based on the information that was available on the day of it's release. Unfortunately we cannot predict the future yet, and due the flexible nature of the legislation, certain numbers and rules may be different in the future.
1. Do you have a tax partner or not?
Find out if you are considered by the IRS to be a tax partner this year. Tax partnership means you can file tax returns together and share certain income and deductions. Unmarried cohabitants who are both registered in the Municipal Personal Records Database (GBA) at the same residential address are tax partners for income tax purposes if one or more of the following conditions are met:
They have signed a notarized cohabitation contract.
They have a child together.
One of the partners has a child and the other has acknowledged the child.
They are registered as partners for a pension plan.
Both partners own the home that is their primary residence.
A minor child is also registered at the same residential address and no business rental agreement can be presented between the cohabitants.
They were already tax partners last calendar year.
2. Do you qualify for personal deductions?
Should you have additional expenses, you can deduct them from your income tax if they are classified as personal deductions. These include partner alimony paid, expenses for specific care costs, costs for temporary stay at home of severely disabled persons and gifts.
Personal deductions are deducted from income in Box 1. Any remainder is deductible from income in box 3 (rate 32% in 2023) and then from income in box 2 (rate 26.9% in 2023). Further, keep in mind that the personal deduction is only deductible at a maximum rate of 36.93% in 2023.
3. Don't forget about taxes on your assets
Check how high your assets are this year. Is your capital not higher than your tax-free capital? Then you have no benefit from savings and investments and do not have to pay taxes in Box 3. The levy-free capital is € 57,000 per person (in 2023). So for you and your tax partner together € 114,000. Is your capital higher? Then only the part above it counts for the calculation of the tax in box 3. The following return percentages apply for 2023:
bank and savings deposits and cash: 0.36% (provisional);
investments/other assets: 6.17% (fixed);
debts: 2.57% (provisional).
On the calculated return, you pay 32% income tax in Box 3. An amendment to the Tax Plan raises this rate to 36% in 2024.
4. Consider making a donation
You can still make an exempt gift of €2,418 per person this year. As a parent, you can donate a higher exempt amount to your child of €6,035.
Attention to the following
Partners, such as parents or grandparents, are considered one donor.
5. Consider gifting for private home.
You can still make use of the increased exemption for the gift for a private home this year under conditions. The one-time increased exemption will be €28,947 in 2023 (the "jubelton bonus" was scrapped in 2022). In accordance with the Tax Plan, the gift exemption for owner-occupied housing will be scrapped altogether as of 2024.
The gift must be given to the recipient between the ages of 18 and 40, or partner of the recipient between the ages of 18 and 40. Also, they both have not previously used an increased exemption for a gift from this donor.
Please note:
although the gift exemption for private homes has already been discontinued as of January 1, 2023, you are still able to supplement a gift from 2022 tax-free up to a maximum of € 106,671 this year (before the end of 2023!) under the transitional rules. This means the supplement must be paid by bank transfer before 01-01-2024 and that money must have been spent by the recipient on their own home before January 1, 2025.
6. Purchase expensive purchases this year
If you plan to make an expensive purchase soon, it may pay off for tax purposes to make and pay for it no later than Dec. 31, 2023. By doing so, you will lower your assets and thus reduce the Box 3 tax.
7. Consider green investing
You can also reduce your Box 3 assets by investing green. Green investments are subject to an exemption in Box 3 of up to €65,072 for 2023. If you have a fiscal partner, then the exemption for you and your partner together is even double (€ 130,144). By amendment to the Tax Plan, this exemption will be scaled back to €30,000 per person effective January 1, 2025.
8. Bundle your healthcare costs
You can deduct your healthcare costs in income tax at a rate of 36.93%. A threshold does apply, which means that only healthcare expenses above this threshold are deductible. Have you already incurred expenses but come in below the threshold? Then consider, for example, making the planned purchase of a prosthesis or orthotics this year so that you can cross the threshold.
Year end tips for all taxpayers 2023 summarized
As you can read in this article, in these year end tips for all taxpayers, there are several ways to optimize your personal tax situation. Fortunately you are not alone, we are ready to assist you with all your questions. Together we are happy to look at your personal situation and what the possibilities are so that you do not have to pay more than necessary.
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