Not paying taxes: avoiding taxes

How do you ensure that you do not have to pay tax for 2020 or 2021? In short, zero tax rate, a tax-free income, no tax on inheritance or donations, no tax on savings or assets to earn tax-free money. Is it possible not to pay taxes without working undeclared or doing odd jobs? The answer is yes, but in most cases it is not a lot of money to live on. The tax authorities know a lot about you and that usually means paying taxes. Usually but not always, because a number of things are tax-free.

No tax on wages, tax-free wages

Depending on your personal situation and age, no wage tax is possible up to approximately 6,100 euros per person. It may be a little more if you are entitled to many tax credits. If payroll tax is withheld, it is possible to request a refund of the tax paid from the Tax Authorities, so that on balance you do not have to pay any tax. This also means that our tax system invites you to see what exemptions there are and what tax credits you are entitled to. You are at least entitled to the general tax credit.

Rent out a room with full tax exemption, zero rate

If you have a room available that you can rent out, in many cases you can do so without paying tax. There are a number of conditions attached to the rental of your room, but with the room rental exemption you can still receive a large amount without paying tax on it. The great thing about this construction is that you fully retain your mortgage interest deduction. The gross rent received is therefore at the same time the net rent received.

Tax authorities allowances are net amounts

You also do not pay tax on the Tax Authorities’ allowances. What you receive in healthcare allowance, housing allowance, child budget or childcare allowance are net amounts that you do not have to declare as wages on your income tax return.

Earn tax-free as a student

Students who receive student loans can earn a decent income without having their student loans reduced. They do pay some tax on their income, but they receive their student finance as a bonus without any problem, and these are interesting amounts:

  • In 2020 and 2021, there is no additional income limit in higher professional education and university education if you do not fall under the old student financing system.
  • In MBO, the additional earning limit will expire in 2020 due to the corona crisis, the limit for 2021 is 15,415.63.

Receiving a gift or donation from abroad avoids tax on donations

Anyone who receives a gift or donation from abroad will receive this tax-free if the donor has lived abroad for ten years or more. It is also easy to receive a donation or gift from someone in the Netherlands without paying tax on it. The most important condition is that the donation does not exceed the applicable exemption. This exemption can increase considerably if a parent wants to give something to his or her own child. You can donate up to more than 5,000 euros tax-free annually, but also much more on a one-off basis if the money is intended for a house or expensive studies. In 2020 or 2021, you may even donate more than €100,000 tax-free to someone under the age of 40 for the purchase of their own home.

Tax-free donation of assets

A tax-free donation is a special donation in the sense that if tax does have to be paid because the donation was higher than the exemption, the giver of the money will be responsible for the tax to be paid. Tax is then paid, but not by the recipient of the donation. The Tax Authorities do not see this as income and do not levy income tax on it.

Inheritance-free, no tax on an inheritance

There are two ways to have to pay little or no tax on an inheritance:

  • In the case of an inheritance, this is free of rights.
  • By using the exemptions that can be large for a partner in particular.

Savings interest is not taxed but the capital is not, avoiding tax on savings

If you have up to 30,846 euros in savings in 2020 or 50,000 euros in 2021, you fall below the tax exemption. This also means that you do not have to pay capital gains tax and that you do not have to pay tax. The same applies to this amount of investments on the stock exchange. Below the capital exemption, all income from savings or investments is tax-free.

Pay less tax through income tax deductions

Finally, a private individual has numerous options to pay less tax if he can make use of deductions. Consider, for example, alimony paid, mortgage interest deduction and medical expenses. These items ensure that you get back part of your tax deduction and thus pay less net tax. Consider the general tax credit for the lowest-earning partner: also known as a kitchen sink subsidy.

Conclusion: don’t pay taxes

It is certainly possible not to pay taxes without doing so undeclared. How much you can receive depends on your personal situation. It certainly makes sense to investigate this carefully and see what you are entitled to. Try to make full use of your income tax deductions.

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  • Earn tax-free in 2019, 2020 and 2021
  • Borrow money from your own BV or save through a savings BV (box hopping)