Living in Germany and working in the Netherlands can be financially attractive
Until the year 2014 any taxpayer, who works in the Netherlands and lives in Germany, had the choice of "domestic taxpayer." The consequences were: the mortgage on your house or property was deductible. That resulted in a hefty refund / tax savings.
The regulations for cross-border workers have been adjusted from January 1, 2015. There is no more possibility to choose. The new arrangement means that the mortgage can only be deducted if the taxpayer (and his / her spouse) earns at least 90% of their worldwide income in the Netherlands and taxes are paid there.
The new scheme can be a financial problem in a number of situations. For example, if the tax partner has no income or a "Basisjob" in Germany. Or when a taxpayer gets an (unemployment) benefit or "Erziehungsgeld" in Germany for a certain period.
Child benefit ("Kindergeld") will be paid from both countries. Initially pays the Netherlands (the employment country). But since you are a resident of Germany, you also are entitled to additional child benefit from Germany. Germany asks a `child support decision` from the Netherlands and pays the difference. So you are entitled to the amount which is regulated by law in Germany. This is for the 1st and 2nd child: € 190, 3rd child: € 196 and from 4th child: € 221 per child per month. From 2017 there is a small increase planned of € 2.
Who works in the Netherlands, must be insured in the Netherlands for medical expenses. Through the Dutch health insurer you can request a E106 / S1 form which you can use to sign in Germany with a German health insurer. The choice of particular concern may be more attractive in one case in Germany and the other in the Netherlands. For example, the cost of dental treatments are partially insured in Germany.
– Plan ahead. If you get provisional refund and your personal situation changes (income ratio), than adjust the provisional refund or even stop it. Do not risk that you get to much tax refund over years and than have to return it. Are you entitled to a refund, the amount will be paid.
– Be careful when sending the income tax return (since 2015). Present the income statement first and make sure you have proof. When you send the declaration without first submitting the income statement (even accidentally), you lose the deduction!
– If you're not 100% sure, let it be setlled by a consultant. In practice, the consultant needs more time (costs more) to correct errors than when the declaration itself is provided by the consultant.
Created at: 18-04-2016
Modified at: 24-11-2016