Taxation in the Netherlands: increased deductibility of Belgian social security contributions

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Taxation in the Netherlands: increased deductibility of Belgian social security contributions

Within the framework of the 2014 Dutch Tax Plan, a recent change was announced with respect to the deduction of Belgian employee social security contributions for Dutch income tax purposes, retrospective as of 1 January 2013.

It concerns individual taxpayers whose earned income is (fully or partially) taxable in the Netherlands, and who are subject to the Belgian social security scheme for employees.

Previously, for Dutch income tax purposes, the (standard) deduction for Belgian employee social security contributions was often limited to 44% of the full amount. As of 1 January 2013, the deduction of Belgian social security contributions has been retroactively increased to a fixed percentage of 73% of the employee’s contributions withheld through payroll, in relation to earned income taxable in the Netherlands.

In practice, the consequences of this increased deductibility are as follows:

  • With regard to income year 2013: The increased deductibility of Belgian social security contributions in principle can still be applied by adjusting the 2013 payroll. Alternatively, a correction can be made via the Dutch individual income tax return.
  • With regard to income year 2014: The increased deductibility of Belgian social security contributions should be implemented in the payroll.