Fiscal Partnership (Fiscaal Partnerschap)
Fiscal partnership is a tax status where two partners can allocate certain income and deductions between themselves for their tax return. Married couples and registered partners are automatically fiscal partners. Unmarried cohabitants become fiscal partners if they are registered at the same address and meet additional conditions (such as a cohabitation contract, a joint child, or a joint home). Upon divorce, fiscal partnership ends when two conditions are met: (1) the divorce petition has been filed with the court, and (2) you are no longer registered at the same address. The divorce does not need to be finalized. In the year of separation, you can choose whether or not to file as fiscal partners.
Example
You and your partner earn €90,000 together — you €70,000 and your partner €20,000. As fiscal partners, you can optimally allocate the mortgage interest deduction (€8,000) and the box 3 tax-free allowance. By allocating the mortgage interest to the higher-earning partner, you save more tax. Upon divorce, in the year of separation you can still choose joint allocation.
Why does this matter?
Fiscal partnership offers opportunities to reduce the total tax burden through smart allocation of income and deductions. Upon divorce, it's important to know the right moment of termination and to optimally use the choice in the year of separation. A tax advisor can calculate which option is most advantageous.
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