The benefits of being tax partners

Life changes in many ways after you get married. From the moment you both say ‘I do’, you become each other’s spouse and are your partner’s legal heir. Married couples, including registered partners, also become what’s known as ‘tax partners’ for income tax purposes. Unmarried couples can also become tax partners if they meet certain conditions. What changes when you become tax partners?

The purpose of your income tax return is to declare your own earnings, assets and deductibles. However, if you’re tax partners, certain items can be allocated to your partner or vice versa. Tax partners are free to divide certain items between themselves on their income tax return. If tax partners choose not to use that freedom, those items on your tax return will be split equally.

Tax partners have the freedom to divide what’s known as ‘joint income components’. This includes:

• taxable income from home ownership (such as the ‘eigenwoningforfait’, or the tax on taxable income from your main residence, and tax-deductible mortgage interest);
• income from substantial interests (such as dividend payments and gains from selling shares in a limited company);
• your personal allowance (spousal or child maintenance, personal care costs, gifts).

Tax partners may also divide their ‘joint tax income from savings and investments’, which falls into ‘box 3’ (income from savings and investments), as well as withheld dividend tax. If you had ‘green investments’ on the reference date of 1 January, you can claim an exemption in box 3 and an extra 0.7% tax credit on the exempt amount (2024). In 2025 this exemption is strongly reduced. 

As you’ve read, tax partners can’t divide earnings and deductions as they wish. For instance, a partner who has income from business profits, wages, pension or spousal or child maintenance must declare these as their own.

Optimising the way you divide certain items can sometimes lower your tax bill by hundreds of euros. Declaring deductions on the higher-earning partner’s tax return used to be the most effective tax-saving measure, at least in most cases. However, as the Dutch government has gradually curtailed tax relief on most deductions, this is no longer the case.

Let’s take 2024 as an example. If one partner earned around €75,000 and the other less than €75,000, but more than approximately €24,000, you should usually be able to save more by allocating the balance of income from homeownership to the lower-earning partner.

From 2024 onwards, the rate against which deductibles, including deductible mortgage interest, can be deducted may not exceed the base rate of around 37%. That remains the case even if one partner’s income falls into the top-band rate of 49.5% income tax (box 1). The partner with the lower income pays at most about 37% tax on the taxable income from home ownership (‘eigenwoningforfait’), while the partner with the higher income pays the 49.5% rate.

General tax credit

Additionally, the general tax credit applicable to the partner with the lower income will increase by up to about 6.6% (decreasing to about 3.4% when you reach state pension age) if the negative balance (‘eigenwoningforfait’ and mortgage interest deduction) decreases this partner’s box 1 income to between around €75,000 and around €24,000. This tax credit is zero for the partner who has box 1 income above approximately €75,000.

Ouderenkorting

Once you reach state pension age, you are entitled to ‘ouderenkorting’ or ‘elderly person’s tax credit’. If your total income – being your income from box 1, 2 and 3 as an aggregate – is around €44,000, you are entitled to the full amount of the tax credit. If your total income is above approximately €58,000, you cannot claim any elderly person's tax credit. Your entitlement to the credit also gradually decreases as you move from the lower to the higher threshold.

If the net deduction decreases your taxable income to between approximately €58,000 and €44,000, the elderly person's tax credit increases by as much as 15%. As a result, you save more by allocating the income from home ownership to the partner with the lower income. However, that might not be the case if their income is lower than around €40,000. Up to that threshold, you pay only about 19% on taxable income from your main residence (‘eigenwoningforfait’) from your state pension age. Below that threshold, mortgage interest may also only be deducted at a 19% rate. As a result, you generally won’t save by allocating the mortgage interest deduction to the partner with the lower income.

Personal allowance

A similar effect to the mortgage interest deduction may occur in the case of the personal allowance, in that allocating the deduction to the lower-earning partner can lead to greater savings in certain cases.

If you marry or enter into a registered partnership, you’re automatically tax partners for income tax purposes. Couples registered as living at the same address are also tax partners if:

• they’re both of age and have entered into a notarised cohabitation agreement; or
• one partner has acknowledged that they’re the parent of the child or children of the other partner; or
• they’re registered as pension partners at a pension fund;
• they’re joint owners of a home that is their main residence; or
• they’re both of age and are registered as living with one or more of either partner’s underage children; or
• they were tax partners in the previous tax year.

A person may also only have one tax partner at a time. There may be situations in which somebody isn’t a tax partner even though they meet all the criteria above. This could be if the partner is a first-degree blood relative or in-law (a parent and a child, or a parent-in-law and son or daughter-in-law) and is younger than 27.

You stop being tax partners as soon as one of the spouses, in the case of married couples, submits a request for divorce or legal separation. Registered partners cease to be tax partners as soon as one of them requests a dissolution of the partnership. The same applies if the partners are no longer registered as living at the same address. This last ground for ending tax partnership is not valid if a partner is admitted to a care home or nursing home. In such a case, you will remain each other’s tax partners unless you report to the Dutch Tax and Customs Administration that you no longer wish to be tax partners.

Tax partners have the freedom to divide certain components of their income in a way that delivers maximum tax savings. Use this freedom with caution, however, as the way you divide items may impact other aspects of your finances, such as your benefits. Consult a tax adviser if needed.