In the Netherlands, maintenance paid by one ex-spouse to the other is tax deductible. Any tax deduction also forms an integral part of maintenance calculations. However, from 2020 onwards the tax deduction for spousal maintenance will be incrementally reduced. This may impact negatively on an ex- spouses ability to pay maintenance in the future.
Changes to tax legislation for maintenance
In 2019 spousal maintenance is/ was tax deductible at the top rate of 51.75 %. The tax deduction for maintenance in the highest tax band will lower progressively between 2020 an 2023. The new percentages will be:
2020: 46.0 %
2021: 43.0 %
2022: 40.0 %
2023: 37.1 %
This initiative is part of an overhaul of the Dutch tax system. In the future only two tax bands will remain. The change will effect an estimated 28 % of all maintenance payers according to a recent letter from the responsible minister. The new rules will effect maintenance payers with gross earnings of more than € 68,507 in 2020. According to the minister, maintenance payers with lower incomes will not be affected by the changes.
In real terms, if maintenance was set in 2017, the calculation will have taken into account a tax deduction on maintenance paid of 52 %. However, in 2023, you will only be able to deduct 37 %.
Does this automatically mean lower maintenance?
In short: no. The change in tax rules does not guarantee a lower level of maintenance. The party paying maintenance will still have to petition the courts to set a lower amount. It is up to the maintenance payer to prove that he or she does not have the means left to pay the original amount once the tax deduction has been reduced.
There may be various reasons why the courts will not reduce maintenance. If the spouses settled the divorce out of court, maintenance may not have been set to maximum capacity, so there may still be room to pay the original amount. A maintenance payer’s basic income may also have improved since maintenance was set. Personal circumstances may also play a role. For example, the maintenance payer is in a new relationship and their new partner can now share living costs.
Have your maintenance payment checked
With nearly 30 % of maintenance payers facing increased costs over the coming years, many of these maintenance payers may well qualify for a reduction in maintenance. We recommend that all maintenance payers in the higher tax band have their maintenance recalculated within the next two to three years. The first tax reduction may not make much difference, but the effect of the lower tax deduction for spousal maintenance will increase over time.
At Dutch Divorce Lawyer we specialise in maintenance calculations for foreign nationals and expatriates. Feel free to contact us for more information.