TAX

Education Expenses

By Frederieke den Hartog

It is the beginning of a new year. For a lot of people, this means time for New Year’s resolutions, changes, and a fresh look at life in general, and work in particular. And what better way to start the new year than with an education to broaden your horizon?

Getting an education almost inevitably involves a tuition fee for the course or study of your choice. With some luck, perhaps your employer will be willing to reimburse (a part of) the tuition fees. If not, then perhaps you will be able to claim a deduction in your Dutch income tax return.

Another issue is that of school fees for your children, or perhaps tuition expenses for your spouse, if he or she decides to go back to school here.

Below, I will describe these options and the tax consequences in more detail.

Reimbursement by Employer
If you are following a course or a program in connection with your employment, then you might be eligible for a tax-free reimbursement of the tuition fees by your employer. The requirements are that the aim of the education must be to either improve your financial position, or to maintain or improve the level of your expertise, for the purpose of obtaining or maintaining an income from present employment. Also the following conditions must be met:
 the expenses may not already have been reimbursed by someone else
 the employer has paid out, or promised to pay out, the reimbursement before the end of the year in which the expenses were incurred.

The employer may provide you with a tax-free reimbursement of not only the tuition fees, but also the costs for literature, materials, as well as the actual costs in connection with travel and accommodation in connection with the education.

The abovementioned on reimbursements also applies to benefits in kind in connection with education granted to you by your employer.

Education Expenses Not Reimbursed
If you have incurred education expenses in order to obtain income from work, but these are not (or only partially) reimbursed by your employer, then you might be able to deduct them, as a personal deduction, from your taxable income via your Dutch income tax return.

In order to qualify for a deduction of these education expenses, again a number of conditions must be met:
- the expenses must have been borne either by you or your ‘fiscal partner’
- the education must be followed with the intention of obtaining income from work
- there should be a direct link between the expenses and the education followed
- there is an expense threshold of € 500; amounts in excess of this may be deducted – in most cases to a maximum of € 15,000.

With regard to the first condition, I would like to remark the following. As noted, either you or your ‘fiscal partner’ must have borne the expenses. If you have received a reimbursement for studies or related expenses, for instance, from your employer, then you must deduct this first from your incurred expenses, before calculating the amount of your deduction. Also if your spouse has education-related expenses then you can deduct these on your Dutch income tax return – provided, or course, above conditions are met.

Regarding the second condition the following applies. The goal with which the education is followed, is of importance to the possibility of deducting the expenses. The goal should be to improve your financial position or to maintain the level of knowledge in order to gain or keep the source of income. This implies that costs incurred in connection with an education aimed at general knowledge, out of personal interest or hobby, or in order to gain personal skills will not be tax-deductible.

The deduction of education costs includes the tuition fees and study materials. However, costs in connection with daily expenses, work or study accommodations, travel and accommodation can not be deducted. Also, if you have received a tax-free study allowance, this should be taken into account when calculating the deduction.

Please note that, in principle, these deductions are not granted to non-resident taxpayers of the Netherlands.

Expats
Additional rules apply to expats who have been granted the 30%-ruling. Expats may receive a tax-free reimbursement of (international) school tuition expenses for school-going children, over and above the 30%-reimbursement. Tuition expenses are defined as those expenses that are paid in order to enable a child to attend elementary, middle or high school at an international school or the international department of a non-international school, up to an amount that the school charges in keeping with the applicable rates – including transportation, but not including board and lodging.

In order for the international school (or the international department of a non-international school) to qualify for this, it must meet the following conditions:
 the education must be based on a non-Dutch system
 the school or department is, in principle, only to be attended by the children of employees who have been sent here from abroad to work.

Summary
Certain education costs can be reimbursed by your employer free of tax. If your employer does not reimburse the (total) education costs, you may be able to deduct (a part of) the education costs as a personal deduction in your Dutch individual income tax return. If you have been granted the 30%-ruling, then your employer may also grant you a tax-free reimbursement of your children’s tuition expenses for an international school. Please make sure to check what your specific options are and, if needed, discuss these with your tax advisor.

Frederieke den Hartog works as a Tax Consultant for BDO CampsObers Rotterdam. She can be reached at Frederieke.den.hartog@bdo.nl