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New tax law encourages both marriage and divorce

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Since 2001 tax forms have had a checkbox that allowed two people living together to declare a ‘fiscal partnership’, a relationship just for tax purposes. It appears (I never looked it up before), that if you and somebody else declare a fiscal partnership you get certain tax breaks, such as mortgage interest deductions for the highest earner.

This year the law has changed. It is no longer enough to declare to the tax people that you and Bob are partners, you and Bob need to have some legal status to confirm this. A wedding certificate is good, as is a registered partnership (civil union) or a notarized ‘cohabitation agreement’. The latter is used for non-intimate relationships (think father-son) and sometimes for uncommon intimate relationships (think polyamorous). What also works is owning a house together or having children together. Couples who never got around to making it ‘official’ now have a decision to take.

Interestingly, married couples who are estranged may wish to explore the possibility of a divorce under the new tax regime, Elsevier reports. You see, this new fiscal partnership is obligatory. It is harder to get into, but you cannot opt out either. One reason for such a divorce could be if each partner owns a house, so that they both can get their own mortgage interest deductions.

Another way to become fiscal partners is to have a partner recognised by one’s pension fund.

The people that may be inconvenienced the most by this measure is those who refuse to divorce for religious reasons, even if they no longer live together—a situation called ‘separated from table and bed’ in Dutch, and legally recognized as such, just no longer by the tax people.

(Photo by Eunice Chang, some rights reserved)

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2 Comments »

  1. […] New tax law encourages both marriage and divorce. The tax office is always good for a dose of absurdist logic. […]

  2. […] New tax law encourages both marriage and divorce […]

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