How much savings can you have in 2024 without having to pay tax on it?
The answer to this question is relevant for many Dutch people, as it determines how much wealth can be built up tax-free. The tax-free threshold, also known as the tax-free allowance, is set at €57,000 for individuals and €114,000 for fiscal partners in 2024. Above this threshold, you must pay tax on your wealth. (
financer.nl)
What falls under the tax-free allowance?
The tax-free allowance includes not only your savings but also other assets, such as investments, a second home, and cash. To calculate your total wealth, debts are deducted. However, there is a threshold of €3,700 for individuals and €7,400 for fiscal partners. This means that only debts above this threshold count towards reducing your taxable wealth. (
rente.nl)
Tax on savings above the tax-free allowance
Does your total wealth exceed the tax-free allowance? Then you pay wealth tax. In 2024, the rate for this tax is 36%. The Tax and Customs Administration does not calculate the tax based on your actual return, but assumes a fictitious return, which is then taxed at the tax rate. This system can be advantageous for savers if the actual yield is low, but it can be unfavourable when returns are high. (
bieb.knab.nl)
Impact of savings on allowances
Your savings can also affect allowances, such as rent allowance and healthcare allowance. For rent allowance, the wealth limit in 2024 is €36,952 for individuals and €73,904 for partners. For healthcare allowance, this limit is significantly higher, namely €140,213 for individuals and €177,301 for partners. If you exceed these limits, you lose your entitlement to allowances, which can make a significant difference in monthly income for some households. (
raisin.nl)
Why does the government levy tax on savings?
The tax on savings was introduced to limit the difference in tax burden between people with a lot of wealth and those with little wealth. Because people with greater wealth can earn more from interest or investments, the wealth tax ensures that everyone makes a fair contribution to the tax system. The level of the tax-free allowance is reviewed annually and adjusted based on inflation and other economic factors.
Tips to minimise tax on savings
Do you want to pay less tax on your savings? Here are some strategies that can help:
- Green saving: Investing in green savings products can provide additional tax benefits. In 2024, for example, there is an additional exemption of €71,251 per person for green investments. This means that your wealth up to this amount is not taxed if you invest in government-recognised sustainable projects. (raisin.nl)
- Saving for your pension: Setting aside money for your pension, for example via an annuity insurance, can also provide tax benefits. Pension savings fall outside the wealth tax, meaning that your wealth in these products does not count towards your taxable wealth. (bieb.knab.nl)
- Deducting debts: Debts can be deducted from your wealth above a certain amount. By lowering your total taxable wealth, you ultimately pay less wealth tax. However, it is important to calculate whether this benefit outweighs the cost of the debts. (rente.nl)
Frequently asked questions about savings and tax
How can I reduce my tax burden without green investments?
In addition to green investments, there are other options, such as pension products or converting savings into investments with a different risk profile.
What happens if my wealth fluctuates?
Because the Tax and Customs Administration uses a reference date of 1 January, your wealth on that date is used to calculate your tax. Fluctuations during the year are therefore not taken into account.
Why can savings affect my allowances?
The Dutch system for allowances looks at total wealth to determine who qualifies for support. This prevents people with high wealth from benefiting from this support.
Conclusion
It is important to be aware of the tax rules regarding savings in the Netherlands. By managing your wealth wisely and making use of the available exemptions, you can reduce your tax burden. The tax-free allowance provides room to save tax-free, and by using green investments or pension products, you can optimally benefit from tax advantages.
