Study expenses – Don’t forget to deduct and obtain a tax benefit!

Dutch tax law offers an interesting benefit for students. College fees and costs for study literature are deductible in the year these costs have been made. There is a threshold (depending in which year the study costs were made) which varies between EUR 250 and EUR 500. Costs in excess of this threshold are deductible either without a maximum or with a maximum of EUR 15,000 per year. Whether or not there is a maximum depends on the age and study past of the student. The maximum applies when the student is at the age of 30 years or older and/or the student already spent more than five years studying. If a maximum applies, than planning is important. Be sure that not more than the maximum amount plus the threshold is paid in a single tax year as the excess will not lead to tax deduction. Often the Universities are open to discuss the payment terms. It may be worthwhile to e.g. pay a part upfront or to pay a part at a later moment, depending on the situation.

Please note the above only applies in case study expenses are borne by the students themselves, therefore the costs may not be covered by a study grant or paid through a gift from e.g. family. It is possible to deduct study costs financed by a loan which is to be repaid. In the case of a loan it is always best to put it on paper. A further important condition is that the study and the intention of the student qualifies as being a chance of obtaining a position on the labour market or to better the position at current employment. Costs made for a study which is followed as a hobby are not deductible.

In order to be able to deduct study costs a tax return is to be filed over the year in which costs were made. Even in a situation in which there were no taxable earnings during the year study costs were made, it is still interesting to file a tax return as a loss following from study expenses can be carried forward to a future tax year in which the student starts an employment and earns taxable wages and/or other income. We can assist with further advisory relating to study costs deduction as well as preparing the required tax returns.

Please feel free to contact Jan-Hein van Leeuwen for any questions you may have on this matter.