When can you claim a tax deduction for study costs on your income tax return?
Indian student
In practice, the answer to this question usually doesn’t make much difference. For one Indian student, however, it did. On 22 August 2016, she registered with the Personal Records Database using a Dutch address. On 1 September 2016, she began her studies at a Dutch university, for which she had already paid the tuition fees on 4 April 2016.
Deduction
In her 2016 income tax return, the student claimed the €15,000 in tuition fees as a personal allowance. After deducting the €250 threshold, the allowance amounted to €14,750.
The Tax and Customs Administration refuses to grant the deduction on the grounds that the tuition fees were not paid during the period in which the student was liable for tax (as a resident) in the Netherlands (but before that). Her tax liability only began when she took up residence in the Netherlands (22 August 2016), yet she had already paid at the beginning of April 2016.
Pay
Personal tax deductions must be deducted at the time they are paid, credited, made available or become interest-bearing. The student stated that she had made a deposit to the university in April, which was only credited at the start of the academic year.
The Court in The Hague does not agree with this. There is no evidence to suggest that the student could have reclaimed the amount paid by the university other than by withdrawing from her course. Information from the university also showed that the tuition fees are recorded as received immediately upon receipt and are deducted from the amount owed by the student.
Non-discrimination
Nor does invoking the principle of non-discrimination, which is enshrined in the tax treaty between the Netherlands and India, offer the student any relief. The Court has found that a Dutch national in the same circumstances (returning to the Netherlands after having resided in India) would have been treated in exactly the same way. There is therefore no question of discrimination on the grounds of nationality.