Suppose, you are taking a sabbatical, you set up your own company and you have not earned that much income, or you qualify for welfare. Or there could be a situation that you are earning more than in previous years. In case of various income, the tax burden is, most likely, higher than in case the income is divided equally over the number of years. In order to compensate, a rule has been introduced: the averaging of income.

This rule ensures that you are able to file a request with the tax authorities for a refund of income tax in case the calculation shows that the tax burden is lower over an amount of 3 years than it would be in case of each year separately, limited by a threshold of EUR 545. The calculation should be based on your so called “box 1” income, the income from work and own house. The calculation should be based on three consecutive years. For example, a request for averaging cannot be filed for the years 2016, 2018 and 2019 and a request cannot include years that have been used for earlier requests.

A request can be filed as soon as all the assessments for the three consecutive years have been determined as final. A request cannot be filed later than 36 months after the last assessment as determined as final. A calculation does not need to be included.

In case you would like to receive more information about averaging or you would like to have assistance with a request, please feel free to contact me.