Personal contribution AWBZ and WMO (Exceptional Medical Costs Act and Social Support Act)
Since 1 January 2013 new rules have come into effect for the determination of the personal contribution for AWBZ and VMO. We would like to bring you up to date with the latest rule changes. In particular the capital tax which is part of the new ruling can be an unwelcome burden – but it can possible be avoided.
Since January Dutch have been paying a 12 percent capital tax to an AWBZ institution, which was increased from 4 percent last year. This is based under the assumption that you have received extra income to the amount of 8% of your capital.
Income
The calculation of your personal contribution is based on your income from two years ago. That is the aggregate income according to your income tax return. If you have not received your income tax assessment, then the calculation is based on your taxable salary. In this is included your salary, pension, and/or benefit. You can find this amount on your annual income statement. If you are married or live in a joint household, then the income of your partner or housemate will be included in the calculation.
Capital in box 3
Do you have capital in included in box 3 of your tax return? Then as of 1 January 2013 your income will be increased by 8% of the value of your (joint) assets minus your liabilities in box 3 for the calculation of the personal contribution, as long as this capital value is over the tax-free capital allowance. The amount of savings and investments can be found in box 3 of your income tax return. Your capital therefore now has a greater influence on the amount of your personal contribution than previously.
You capital in box 3 may have increased. For example because you may have sold your house and now have extra savings in the bank. Or maybe you have received an inheritance. Your capital may also increase because some of the rules for box 3 have changed. If you have investments in venture capital of socio-ethical investments, then there is no longer an exemption for these in box 3.
Capital decreased?
You can decrease your capital by adapting your will so that your children received the inheritance as you get older if you end up as the sole remaining parent in an AWBZ institution.
You can reduce your capital by gifting “on paper”. To do this you gift assets to your child, but they then loan the amount back to you. In this way your child (or children) holds a claim against you which will later be reduced upon receipt of the inheritance. The inheritance will then be reduced and your child will have less inheritance tax to pay. In addition the gift reduces the capital amount in box 3 because you are indebted to your child(ren).