Fluctuating Income

If you have had a strongly fluctuating income for a number of years, you run the risk of having paid more tax than someone who had an even income over those years. The good news is: you can have this adjusted!

This is done by averaging the income over three years and sending a request for income tax averaging to the tax authorities.¹

How Does Income Variation Work?

When you add up your taxable income from Work and Home (Box 1) over three years and divide by three, you get an average income over that period. Tax can then be calculated on the average income from those three years.

Via your final assessments (which can no longer be objected to) for the three years for which you want to apply averaging, you can make the new calculation and see whether the income tax to be paid after averaging is lower than what you paid for those three years.²

Time Limitations

Once you have calculated whether averaging works in your benefit, you can send the request to the Dutch Tax Authorities (Belastingdienst). This form can be found on the website of the Belastingdienst. Make sure you don't wait too long: the form has to be submitted within three years after the date of the last assessment of the three years for which you wish to apply.¹

‍If you need help determining your optimal averaging years, calculating and submitting the averaging request, please send us a message!

Reference List

¹ https://belastingmiddeling.nl/

² https://www.belastingdienst.nl/wps/wcm/connect/nl/werk-en-inkomen/content/hoe-kan-ik-mijn-inkomen-middelen-en-geld-terugkrijgen

Taxably writes blog posts and articles to keep you informed on latest tax-related news. This information is general in nature, and should not solely be relied on, or used as a substitute for professional advice. Certain articles are written in collaboration with Taxably’s business partners. We recommend seeking professional advice if you have any related questions.
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