Deduction of tuition costs in 2020 remains

Perhaps you know that the tax deduction for education in the Netherlands was planned to be canceled from 2020, and to be precise, not canceled, but replaced by a subsidy system. Recently it became known that this replacement is postponed for one more year. Since the Ministry of Education, Culture and Science is still working on a new scheme for the state budget for training and development, the so-called Stap-budget, the essence of which is to provide financial opportunities for professional development. 

Everyone can apply. It is planned to allocate 1-2 thousand euros per person, which will be paid not to the employee or employer, but to the organization conducting the training. The total budget will be 200 million euros. Thus, the ministry expects to stimulate from 100.000 to 200.000 people annually to continue their education in the profession. Read more here.

The stap budget can be used, for example, to obtain an MBO or a certificate with which an employee in a particular sector can pursue higher education. Individual courses are also eligible for possible subsidies if they are aimed at career advancement or improving job opportunities.

The application must be registered online on the UWV website, where it will be reviewed and approved. If so, the money will be paid directly to the organization offering education or courses.

In a letter to the Lower House, ministers also paid attention to the question of whether the costs of training an employee are tax exempt under the payroll tax law. This is due to the fact that collective bargaining agreements increasingly contain a clause on the budget for development and training. 

The tax office provided explanations on this matter and prepared a special questionnaire with which the employer can quickly check the eligibility for tax exemption when paying for employee training. This will help minimize the risk of an unforeseen additional tax burden. The questionnaire is designed to provide a clear answer to the question of whether the chosen training program is tax exempt.

What rules will apply for the deduction of tuition costs in 2020?

The training costs that you or your fiscal partner bear on your own by paying for your studies related to your current or future profession, in some cases, can be deducted from taxes. Below you will find a list of conditions for obtaining a tax deduction for training: 

• The study should take place under the guidance and supervision of a teacher.
• Only amounts above the EUR 250 threshold per person can be deducted.
• A maximum of EUR 15 can be deducted per calendar year.
• You can only deduct mandatory tuition costs, such as tuition fees, exam fees, purchase of compulsory books, other study materials and subjects that you need to study or that are supposed to protect you during your studies. In this case, we are talking, for example, about special clothing, goggles, hairdressing supplies, painting supplies, carpentry tools, special shoes, a helmet, etc.
• You can also deduct the cost of purchasing a musical instrument. 
• In addition, you can deduct the costs that you incur for promotion, such as the cost of publishing a thesis or other expenses related to training necessary for career growth.
• The cost of EVC procedures (Erkenning van Verworven Competenties - Recognition of acquired competencies).

What tuition costs will not be deductible in 2020? 

Travel expenses, living wages, interest on a student loan, laptop, e-book, computer expenses, any living expenses, study trips or excursions are non-deductible, even if you pay for the rental of the training facility. They are not deductible as private tuition fees. If you are a self-employed person, this can be considered a cost of doing business. 

What if you receive a non-refundable tuition grant or student loan? 

Since September 2015, there are three categories of students:

• Those who are not eligible for a non-refundable government tuition grant.
• Those who are eligible for training funding under the old system.
• Those who received a loan for training under the new system.

The deduction is calculated differently for each category.

• Those who are not eligible for a non-refundable tuition grant and who also qualify for the deduction are eligible for a tuition tax deduction. The first 250 euros are not deductible, however, what is above this threshold will be taken into account in the calculation. 
• Those who study under the old system can calculate their deduction by adding up the required tuition costs and subtracting the scholarship from there. There is no transition from the old system to the new one for them, so the deduction will also be impossible for them from next year. The only exception to this is the situation when the funding associated with the results of previous years, for some reason, passed into the category of returnable grants for training.
• Those who study under the new loan system and receive a student loan will not be eligible for the education deduction in 2020.

What is the amount of the tuition refund that can be obtained from the tax office?

It is important to remember that the tax authorities do not fully reimburse tuition costs. Students tend to have low income and receive between 30% and 40% tax deduction as a result. If, in the reporting year, the student had no income, but had tuition expenses, it may be necessary to wait for a tax refund for at least a year until the taxes paid are enough to return something.

The amount of the tax deduction in 2020 will depend on many factors. Therefore, it is difficult to name any specific amounts. It is also worth keeping in mind that only those expenses that you yourself or your fiscal partner paid for this year can be deducted. That is, if the parents paid for the tuition, these payments are not tax-refundable unless they are an officially issued student loan. 

To summarize all of the above, we recommend that you, if possible, not refuse the tax refund for training. And of course, if you are studying or studying in 2019, and most importantly, you paid for tuition in 2019 and it seems to you that you are eligible for this refund, we will be happy to help you get it by filling out your tax return correctly.