Personal allowance (persoonsgebonden aftrek)

For the levy of income tax in the Netherlands, a special tax deduction is allowed for certain expenses relating to the personal situation of the tax payer.

The income in Box 1 (income from employment and main residence) can be reduced with certain personal allowances (in Dutch: 'persoonsgebonden aftrek'), but no further than nil. Any remaining amount may first be offset against Box 3 income (income from savings and investment) and after that, Box 2 income (income from substantial shareholdings).

The amount of the personal allowance equals the aggregate amount of personal deductions of the running year, and the (officially recognized) non-utilized amount of the personal deductions of previous years.  

The personal deductions include certain: 

• expenses for maintenance obligations (in Dutch: 'onderhoudsverplichtingen');
• expenses of specific costs of care;
• weekend expenses for disabled persons;
• expenses for listed monumental buildings;
• deductible gifts.

The amount of these expenses must be reduced with reimbursements/compensations received for these expenses.

If in a certain year the amount of the personal deductions cannot be fully utilized because there is not sufficient positive income, the non-utilized amount can be carried forward to the next nine years. The amount must be confirmed in a Decree from the tax office.