Fiscal Partnership
Fiscal partnership is an arrangement that allows you and your partner to split certain income and deductions across both your tax returns. Married couples and registered partners are automatically fiscal partners. Cohabiting couples can be fiscal partners if they meet certain conditions, such as being registered at the same address and having a notarized cohabitation agreement. As fiscal partners, you may divide the following items between you: income from the primary home (mortgage interest deduction and deemed rental value), box 3 income (wealth), personal deductions (healthcare costs, charitable donations, study costs), and certain tax credits. By dividing smartly – allocating more deductions to the partner with the higher tax rate – you can save significantly together. Important: fiscal partnership always applies for the entire year. You cannot start or stop halfway through the year, except in cases of marriage, divorce, or death.
Example
You earn €70,000 and your partner earns €25,000. You pay €5,000 per year in mortgage interest. If you claim the full mortgage interest deduction, you save 36.97% = €1,849. By placing the deduction with you, you lower your income in the higher brackets. At the same time, you divide the box 3 assets so that the tax-free allowance is optimally used.
Why does this matter?
Fiscal partnership can mean hundreds to thousands of euros in savings per year. Especially when there is a large income difference between partners, smartly dividing deductions and assets is very advantageous. Always check whether you meet the conditions as a cohabiting couple.
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