Partner Income Allocation
For residents of Rotterdam, partner income allocation is a smart tax tool under Dutch tax and family law. Spouses or tax partners can reallocate incomes from port jobs, real estate, or other sources through their income tax return. This often reduces the overall tax burden, depending on their partnership status and marital property regime. We explain the rules, with examples and tips tailored to Rotterdam residents.
What is partner income allocation?
This arrangement allows tax partners to reallocate incomes in box 1 (work and home) and box 3 (assets) for lower income tax liability. Think of better distribution across tax brackets or optimal use of tax credits. Read our article on marriage and taxes for the basics.
Married couples or registered partners qualify automatically for tax partnership. Cohabiting partners must meet strict requirements. Without allocation, incomes remain separate, potentially leading to higher taxes for Rotterdam residents with unequal earnings.
Legal basis
The Income Tax Act 2001 provides the foundation:
- Article 2.1 of the Income Tax Act 2001: Definition of tax partnership.
- Articles 2.13 and 2.14: Reallocation of box 1 incomes.
- Article 2.36: Allocation of deductions.
- Article 3.111: Box 3 assets, such as savings accounts.
Overview of allocation mechanisms
Choose the best mechanism for your situation. Here's a table for Rotterdam residents:
| Mechanism | Description | Conditions | Benefit for Rotterdam |
|---|---|---|---|
| Box 1 allocation | 50/50 or customized split of work and home incomes. | Both have income, e.g., port worker and office job. | Optimize brackets for lower rates. |
| Periodic payments | Attribute alimony to ex-partner. | For maintenance, paid periodically. | Deductible for payer, taxable for recipient. |
| Gift allocation | Fiscal splitting of gifts. | No exclusive marital conditions. | Lower gift tax. |
| Box 3 reallocation | Split assets as of January 1. | Tax partnership. | Halve the levy on uneven assets. |
Requirements for tax partnership
Be a tax partner to allocate:
- Automatic: Marriage or registered partnership.
- Cohabiting: Quality requirements, including:
- Shared address in Rotterdam for at least 6 months.
- Dependent child or joint mortgage.
- Notarial deed with joint liability.
Practical examples for Rotterdam
Example 1: Box 1 in the port
Partner A (€60,000 from Rotterdam port job), B (€20,000). Without split, higher bracket (37.07% vs. 36.93% in 2023). 50/50 (€40,000 each) saves €500 plus tax credits for B.
Example 2: Alimony post-divorce
€12,000 alimony: deductible for ex in box 1, taxable for recipient. Miss attribution? No deduction.
Example 3: Box 3 assets
A: €200,000 savings, B: €0. Allocation: €100,000 each, halves 1.2% levy.
Rights and obligations
Rights:
- Choose the most advantageous allocation in joint return.
- View each other's data via Tax Authority app.
- Appeal: hearing and litigation at Rotterdam District Court.
Obligations:
- Joint return (unless opted out).
- Accurate information; fines up to 100% for fraud.
- Marital conditions (exclusion clause) may limit allocation.
Frequently asked questions
Am I a tax partner with my Rotterdam cohabiting partner?
Yes, if quality requirements are met: address, child, or mortgage. Use the Tax Authority tool or Juridisch Loket Rotterdam.
Can I change after filing?
No, binding for the year. Supplementary return up to 5 years, risk of additional assessment.
Registered partnership?
Yes, equal to marriage. More info.
Partner abroad?
No partnership, unless both Dutch taxpayers. Check treaty.
Tips for Rotterdam residents
- Plan ahead: Use Tax Authority trial calculation for best split.
- Amend marital conditions: Limited community for flexibility. Read more.
- Free advice: Visit Juridisch Loket Rotterdam or Municipality of Rotterdam for local filing help.
- Divorce: Timely request Rotterdam District Court to dissolve partnership.