Passionate Parenting

Arjan Enneman is managing director of Expatax BV. He is an expat himself living in Belgium with his family and two children. Arjen has first hand experience with foreign institutions and rules in relation to children. He has extensive experience in taxation and specialises in expats issues, also financial aspects related to children.

Are there any tax breaks for parents with young children ?

There are indeed tax benefits. First of all we have the so called child tax credits. These are credits which directly reduce the tax amount which need to be paid. In the Netherlands we have the following child tax credits (changed in 2006):

• general child tax credit: you have a child younger then 18 years who is registered for at least 6 months at your address in 2006 and your total income is below € 44,034. Maximum credit is € 802. It can be claimed by the parent with the highest income.
• the combination tax credit: you have a child younger then 12 years who is registered for at least 6 months at your address and you have a job or business with which you earn more then € 4,405. The credit amounts to € 146. Both parents can claim this credit.
• supplementary combination tax credit: you receive the combination credit and your are a single parent or the parent with the lowest income. The credit amounts to € 608.
• single parent tax credit: you have no partner for more then 6 months and you have a child younger then 27 years who is registered for at least 6 months at your address. The credit amounts to € 1,414.
• supplementary single parent tax credit: you receive the single parent tax credit and have a paid job and a child younger then 16 years who is registered for at least 6 months at your address. The credit amounts to 4,3% of the earned income with a maximum of € 1,414.

If the child goes to day care it is possible to have part of the costs reimbursed tax free. The employer can pay a part tax free and you can request the tax office to pay you a child care allowance. The amounts which can be reimbursed tax free depend on the income of the family and the costs of the child care. You will also receive a child allowance if the child is registered in the Netherlands. This allowance is also tax free.

Are there any tax breaks for parents with older children ? (I´m thinking anything to do with education fees, special school fees, etc)

In the Netherlands school fees are paid by the government. Only additional costs like school trips have to be paid by the parents. If the child will go to an international school then the school fees will be (much)higher and have to be paid by the parents. These fees can't be deducted in the tax return. If however a parent has the 30% ruling then this parent can arrange a tax free reimbursement of the costs with the employer. In return the employer may want to reduce the gross salary. For older children you will also receive the child allowance. If they will start to study then they can get a study allowance.

What is the kinderbijslag and how can I get it ?

The Netherlands has a child allowance, as mentioned above, called Kinderbijslag. This is a (quarterly) payment to a parent of any child under 18 years old. There are also provisions for handicapped children over the age of 18. As with everything else in Europe, there are many rules governing the disbursement of this money. It is not necessary to be a Dutch citizen to qualify however the child must be a legal, permanent resident. This status is given to your child when you register at the local municipal office. You qualify even if you are working for non-Dutch company or are self-employed and you or your company on your behalf are paying Netherlands taxes and social benefits. Application can be made at your local Municipal building. They will ask for the original birth certificate, proof of residence, passport, proof of school enrollment or training/apprenticeship and medical documentation for a handicapped child if over 18. The amount of Kinderbijslag varies depending on how many children you have. Your entitlement to this money can be determined with a quick visit to your local Municipal offices. Due to the amount, it is worth your efforts. More info can be found on the Expatax website.

If I want my child to go to university how much do I need to be saving and are there any special savings plans to do this ?

Costs of university in the Netherlands are relatively low. The student pays an annual fee, which at the moment is between € 1,500 and € 2,000 per year. If an international university is involved the costs can be higher. And commercial studies like an MBA study can cost around € 25,000 or even more. Dutch students can get an education allowance from the government. The basic allowance is fairly low, depending on the income of the parents an additional allowance can be requested or a student loan arranged. It is possible to start a savings plan to cover these costs in the future. This is a sort of investment plan saving for a capital. A lot of insurance companies and banks offer these products. There is no tax benefit, the amounts paid are not deductible. Since there is no tax benefit it is important to look at the performance of the product in the past and the costs involved.

Can I open a savings account for my child and will they pay tax on the interest ?

It is possible to open a bank account which will be used to save money for your child. You can agree with the bank that you as a parent will hold the account for your child till the age of 18 to prevent that money is withdrawn by your child before the age of 18. The child doesn't pay tax on the interest, instead the parents have to declare the account in their tax returns. If one of the parents has the 30% ruling and opted for deemed non residency in the Netherlands for tax purposes then the parents don't have to declare the account in the Netherlands either.

Are there other financial issues to consider, related to being a parent ?

• My child is earning an income. How will it be taxed?
  Your child will be taxed for his or her own income. Since the income will normally be not very high the tax to be paid will stay low. If the income however becomes high, of course the tax to be paid will go up but the income can also affect the right for child allowance or education allowance.
• I receive alimony for my child. Is it tax free?
  Alimony received for a child is tax free since the law assumes that there is a natural obligation based on the relationship between the parent who left and the child.
• I support my children who are not living with me. Can I claim a deduction?
  The real alimony amount is not deductible for the parent who paid it but it may be possible to claim a fixed deduction for costs of child support instead.