Tax partnership affects the amount of income tax payable. For healthcare, rent and childcare allowances, the concept of benefit partner. However, anyone who is a tax partner is almost always also a benefit partner.
When are you considered a partner for tax purposes?
The most obvious form of tax partnership is when you are married, or when you have entered into a civil partnership. In such cases, you have no choice and are each other’s tax partner.
Co-habitants are each other’s tax partners if they are registered at the same address in the GBA (Municipal Personal Records Database) and:
- were tax partners last year, and this situation has not changed;
- have a notarised cohabitation agreement;
- a cohabitation agreement and having a child together (or the child has been recognised by your partner);
- own a home together;
- if they are registered as partners with a pension fund;
- are over 27 years of age and a child under the age of 18 is registered at the same address.
State Secretary for Finance Snel, has stated that an adult child may be treated as a partner for tax purposes in relation to his or her parents. The State Secretary made this ruling in response to a case in which a father had provided accommodation for his daughter (aged over 27) and grandchildren following her divorce.
However, this has a negative impact on the benefits. In that context, too, the daughter and her father are regarded as partners.
In addition, it is possible to designate a foster child as a tax partner. With effect from 1 January 2018, you will no longer automatically be considered a tax partner in this situation; you must submit a request to the Tax and Customs Administration for this.
The tax partnership only takes effect from the moment one of the above situations is met. It does not apply retroactively to 1 January of the year in question.
When does the tax partnership come to an end?
In all cases where you do not meet the above conditions, you are not each other’s tax partners. If you were married (or in a registered partnership) but have filed for divorce AND, according to the GBA, no longer live at the same address, you are also no longer tax partners.
Advantages
The advantage of being each other’s tax partner is that you can share certain tax deductions between you, such as: mortgage interest, healthcare costs, education costs and charitable donations. These can be allocated to the person whose income falls within the highest tax bracket. In addition, you can also allocate assets in Box 3 to each other. This is particularly advantageous when one person has a lot of assets and the other has few. In this way, you can also make use of both partners’ tax-free allowance.
Would you like to know more about the allocation between tax partners? See our article on the allocation between tax partners!
Disadvantages
You are also regarded as a partner for the purposes of benefits. Your incomes and assets are added together. As a result, you may be entitled to a lower benefit.
Harmonising the definition of ‘partner’ across the various laws
State Secretary Snel states that he has no intention of harmonising the criteria for partnership across the various Acts. Snel states that the basic concept of partnership applies to all tax Acts. However, additional objectively verifiable categories have been included for income tax and benefits. According to the State Secretary, this has led to clearer regulations and simplified implementation for the Tax and Customs Administration.