Netherlands tax

Dutch tax system and salary calculation: Tax in the Netherlands

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Certain expats are entitled to Dutch tax benefits; this guide to tax in the Netherlands explains the Netherlands' tax rates, how to calculate your net salary and the Dutch tax system and tax benefits for expats.

The Dutch tax system, especially for an expat, is anything but simple.

The Netherlands is a socially conscious country, and you can expect to pay a substantial proportion (up to 52 percent) of your salary to the taxman. But your personal situation (non-working partner, for example), type of work, residency status and other assets and earnings (particularly from abroad) affect your position considerably. In many cases, you will still be filing a tax return in your home country and will be entering the land of double taxation agreements. Different rules apply to self-employment taxes in the Netherlands.

For expats, particularly in the year of arrival and the year of departure, filing a tax return may result in a substantial rebate. Tax returns can be completed retrospectively for a period of five years.

This guide to tax in the Netherlands explains:

Netherlands tax: Are you a resident or non-resident taxpayer?

If you have demonstrable ties to the Netherlands (for instance, you live here, you work here, or your family is based here) you are generally regarded as a ‘resident taxpayer' from day one. As a resident taxpayer you are taxed on your assets worldwide.

If you live abroad but receive income that is taxable in the Netherlands you are generally a ‘non-resident taxpayer'. Non-residents can also apply to be treated as residents for tax purposes (in order to gain access to Dutch deductible items) and an additional category of partial non-resident taxpayers covers those eligible for the so-called 30 percent ruling (see below). Read more in our guide to rules for non-resident taxpayers.

Tax in Netherlands – tax in the Netherlands

How much tax in the Netherlands do you pay?

Each year you earn income in the Netherlands, you will typically be required to file a Dutch income tax return and pay taxes in the Netherlands.

The Dutch tax system

Different categories of income are treated differently for tax purposes on the tax return, and subject to different Dutch tax rates. There are three types of taxable income:

  • Box 1: Income from profits, employment and home ownership. This includes wages, pensions, social benefits, company car, and WOZ value of owner-occupied property – maximum 52 percent Dutch tax rate.
  • Box 2: Income from substantial shareholding (5 percent minimum holding) at a 25 percent tax rate.
  • Box 3: Taxable income from savings and investments at a 30 percent Dutch tax rate. Income from property for instance, owned but not lived in as a main residence, is taxed here: not the actual income but the value of the asset. Tax is relative to assets held on the 1 January each year.


Until 2016, the taxable rate in box 3 was calculated based on a fictitious profit of 4 percent (multipled by a tax rate of 30 percent, thus equalling 1.2 percent of taxable equity). As of 2017, income tax under box 3 will fall into three brackets, with taxes based on fictitious profits of 1.63 percent and 5.39 percent depending on your income level.

Savings and investments Taxed at 1.63 percent Taxed at 5.39 percent
Up to EUR 75,000 67 percent 33 percent
EUR 75,000–975,000 21 percent 79 percent
EUR 975,000+ 0 percent 100 percent


Payable tax = tax base x percentage fictitious profit x 30 percent (Dutch tax rate)

Each resident in the Netherlands is entitled to a tax-free capital threshold, set at EUR 25,000 in 2017 for an individual (or EUR 50,000 for fiscal partners); pension-age residents are typically allowed an extra threshold of 50 percent up to a certain amount. Certain assets are also exempt, for example, moveable assets, such as a car, and green investments up to EUR 57,385 (or EUR 114,770 for partners).

As of 2017, non-resident taxpayers will also be allowed to claim a basic allowance in tax box 3 when determining their benefits from Netherlands-based investments and savings, potentially lowering your Dutch tax rate in certain situations.

Dutch tax rates

There are many variables that influence your Dutch tax rate. However, as an example, below are the basic Dutch tax rates in the Netherlands in 2017 for those below retirement age:

  • Up to EUR 19,982: 8.9 percent (EUR 1,778)
  • EUR 19,982–EUR 33,791: 13.15 percent (EUR 1,816–3,594)
  • EUR 33,791–EUR 67,072: 40.80 percent (EUR 13,579–17,173)
  • EUR 67,072+: 52 percent


On top of this, Dutch social security tax is paid at a rate of 27.65 percent in 2017, down from 28.15 percent in 2016 (or 9.75 percent for pension-age residents). To get an idea about your individual income tax in the Netherlands, you can use a Dutch income tax calculator.

Calculating your tax in the Netherlands

The total amount of tax payable is calculated by applying the various Dutch tax rates to the various taxable incomes in the boxes. The amount calculated is then reduced by one or more tax credits. The government provides instructions on Dutch income tax calculations.

Dutch tax number

Your Dutch tax number is known as your Burgerservicenummer (BSN). You will receive a Dutch tax number when you register with a local Dutch municipality to become a resident in the Netherlands. This number is not only used for your taxes but is also used for social security services, such as arranging your Dutch health insurance.

Dutch VAT rate

VAT (value added tax) in the Netherlands is known as BTW (Belasting Toegevoegde Waarde). Sales tax in the Netherlands applies when you sell or buy goods or services in the Netherlands, although there are some exemptions from Dutch VAT. If you are required to charge VAT in the Netherlands, then it will be following one of three tariffs:

  • Zero Dutch VAT applies to international activities, such as transferring goods or offering services outside of the EU.
  • A Dutch VAT rate of 6 percent Dutch, commonly known as the ‘low tariff’, is applied to the sale of common products (food, drink, agriculture, medicines, books etc.).
  • A 21 percent Dutch VAT rate, also called the ‘high’ or ‘general tariff’, applies to all other VAT taxable activities.

More information on sales tax in the Netherlands can be found on the Dutch tax office website.

Income tax Netherlands – Dutch income tax calculator

Deadlines for paying taxes in the Netherlands

In general tax returns are submitted digitally, except the M form which must still be filed on paper (for residents in the Netherlands for part of the year only). The M form must be filed in the year of migration. The deadline for the tax return is 1 April, for the M form 1 July. If you are not able to file before 1 April, you can request an extension.

To file a return, you will need a digital signature or DigiD (www.digid.nl) or the services of a tax consultant. The DigiD is essentially a personal login that you use with all government agencies enabling some transactions (paying parking fines, applying for permits etc.) to be done over the internet. Authentication requirements may vary according to the sensitivity of information in transit. You can read more in our guide on how to do your income tax return in the Netherlands.

There are many expat financial specialists who can complete your tax forms for you or provide other consultancy services. Other useful information can be found on the Expatica's Ask the Expert service, where financial experts answer readers' questions. The tax office is the Belastingdienst (www.belastingdienst.nl) and their website has information in English. The Ministry of Finance also publishes guides (in English) on the Dutch Taxation System (www.minfin.nl).

Tax refunds in the Netherlands

You may be entitled to a tax refund in the Netherlands if you pay too much tax and social security contributions. This can particularly occur if you have worked in the country for less than 12 months, for example, in the year you arrive or leave the Netherlands.

To apply for a tax refund in the Netherlands, you can either file a request for a provisional Dutch tax refund or make an application when completing your annual tax return in the Netherlands. There are three main categories for which you claim tax refunds in the Netherlands: owning your own house, general tax credits, and education.

Dutch tax credits and allowances

Everyone is entitled to a general tax credit, which income-based; the maximum Dutch tax refund in 2017 is capped at EUR 2,254 for low-income earners, gradually decreasing (at a reduction rate of 4,787 percent) to zero for high-income earners (above EUR 66,726); for state-age pensioners, the maximum credit is EUR 1,151. If you are employed, this will be automatically credited to your tax balance by your employer.

You may be additionally entitled to other Dutch tax refunds, for example, the single parent's tax credit or an old-age tax credit (EUR 1,292). You can find out if you are entitled to any social benefits using the government's online tool (in Dutch).

The Netherlands' general tax credit comprises an income and social security element (to which you are only entitled if you have compulsory Dutch social security coverage). Your employer will take these into account when deducting wage withholding tax but not any other personal circumstances. You claim other allowances and potential refunds when you file your tax return or request a provisional refund.

Labour tax credits are also granted to residents in the Netherlands who earn income from:

  • wages from employment
  • trade or business activities
  • any other form of activity.


Similar to general tax credits, the maximum labour credit in 2017 for low-income earners starts at EUR 3,223 (or EUR 1,645 for retirement-age residents), decreasing at a reduction rate of 3.6 percent to zero credits allowed on income more than EUR 121,972.

Taxes in the Netherlands for partners

Where possible, partners are taxed individually but, when only one partner works, the other partner is generally entitled to a refund of general tax credit and deductible expenditure can be apportioned to take advantage of tax credits. Under certain conditions, unmarried couples may qualify as tax partners also, for example if they have a child or own a home together. Details are listed on www.belastingdienst.nl.

30 percent tax ruling

The 30 percent ruling is a tax incentive for employees, recruited from abroad who bring specific skills to the Netherlands. It acknowledges the additional expenses incurred by expats (extraterritorial costs) by allowing the employer to grant a tax-free lump sum to cover these costs up to a maximum of 30 percent of the sum of wages and allowances. Applications (completed by both employer and employee) should be made to the Belastingdienst Limburg Kantoor Buitenland in Heerlen. More is explained in our guide to the Dutch 30 percent rule.

Netherlands tax rate – Dutch tax rates

Mortgages and Dutch tax implications

When arranging a mortgage it is important to look at the whole picture: interest, cost of life insurance, savings plan and investment accounts. If you are intending to sub-let, you may need to pay off a substantial part (say 30 percent) of the mortgage to get permission from the lender. When your interest rate comes up for renewal, it is important to check that it is still competitive.

Tax implications include:

  • Interest payments are tax-deductible if the property is your primary residence and the loan is used for acquisition of the house.
  • There is no capital gains tax in the Netherlands but increases in the value may impact your mortgage relief if and when you use the profits to buy another house in the Netherlands.
  • Expenses in financing the purchase of a house are tax-deductible. (Read more in Expatica's article on tax advantages for expat house buyers).

Property tax in the Netherlands

Onroerendzaakbelasting (real estate tax) is a property tax in the Netherlands calculated on the deemed rental value of the property (known as WOZ-waarde, or immovable property tax). Each municipality determines its own Dutch property tax rate, typically ranging between 0.1 percent and 0.3 percent of the property value. Read more on buying a property in the Netherlands.

Inheritance and gift taxes in the Netherlands

Residents in the Netherlands may also be subject to Dutch inheritance tax or gift tax, although in some cases foreigners can opt to apply the inheritance law of their home country. Read more in our guide to inheritance tax in the Netherlands, Dutch inheritance law and Dutch wills.

Corporate tax in the Netherlands

Public and private companies in the Netherlands are subject to Dutch corporate tax on their profits. If the taxable amount is less than EUR 200,000, a Dutch corporate tax rate of 20 percent applies; if the taxable amount is EUR 200,000 or higher, companies are liable to pay a Dutch corporate tax rate of 25 percent. Certain companies can apply for an exemption to access lower corporate tax rates. Read more on corporate tax and self-employment tax in the Netherlands.

Dutch tax fines

In 2015, the government raised the penalties for undeclared income. Hidden income found by the Belastingdienst risks a fine of 300 percent, while voluntary declarations of hidden income, wealth and gifts/inheritance are fined at 60 percent (up from 30 percent).

Tax payers who corrected an 'inaccurate tax return' within two years of submitting it previously got off with a warning. However, in 2017 the Dutch government announced plans to abolish the voluntary disclosure scheme in place of imposing a fine of 120 percent of tax revenue on anyone found to have illicit savings abroad or in the Netherlands. Other measures were also proposed that will increasingly allow more transparency and reduce tax evasion. The government will discuss the proposals this year.

Paying Dutch taxes online

If you want to file your taxes electronically, or indeed any other official form (local taxes etc.), you need a DigiD registration number. The website www.digid.nl has an English section.

Netherlands tax

Amsterdam taxes

Amsterdam city council requires every tourist to pay 5 percent city tax on their accommodation, which is typically included in the price. This contribution is put towards city improvements. Home owners instead pay the yearly Dutch property tax (Onroerende Zaakbelasting) based on the value of their property, which is assessed by the municipality each year.

Tax advisors in Amsterdam

There’s a wide range of taxation professionals and services in the Netherlands, many offering advice in English and other European languages. Expatica’s listings directory includes a list of tax advisors in Amsterdam and around the Netherlands.

As of July 1, 2015, the Dutch tax office has increased the penalties for undeclared income. The penalty for voluntarily declaring hidden income, wealth or inheritance has risen from 30 to 60 per cent. Hidden income that is discovered by the Belastingdienst risks a fine of 300 per cent. - See more at: http://www.iamexpat.nl/expat-page/official-issues/taxation/dutch-tax-system#sthash.MbUHqOOH.dpuf
As of July 1, 2015, the Dutch tax office has increased the penalties for undeclared income. The penalty for voluntarily declaring hidden income, wealth or inheritance has risen from 30 to 60 per cent. Hidden income that is discovered by the Belastingdienst risks a fine of 300 per cent. - See more at: http://www.iamexpat.nl/expat-page/official-issues/taxation/dutch-tax-system#sthash.MbUHqOOH.dpuf
As of July 1, 2015, the Dutch tax office has increased the penalties for undeclared income. The penalty for voluntarily declaring hidden income, wealth or inheritance has risen from 30 to 60 per cent. Hidden income that is discovered by the Belastingdienst risks a fine of 300 per cent. - See more at: http://www.iamexpat.nl/expat-page/official-issues/taxation/dutch-tax-system#sthash.MbUHqOOH.dpuf

Contacts for tax in the Netherlands

Dutch tax authority: Belastingdienst

The website for the Dutch tax authority (belastingdienst) has extensive information in English and downloadable forms and brochures.

There are separate offices for resident and non-resident taxpayers; email queries are not possible:

  • TaxLine – 0800 0543. This is the central information line for residents (only Dutch spoken); Monday to Thursday: 8am–8pm, Friday: 8am–5pm.
  • Information line for non-resident tax issues – 055 538 5385 or +31 555 385 385. This covers businesses and individuals based abroad who are liable for Dutch tax and also those classified as non-residents for tax purposes.


Government

The Ministry of Finance provides details of the Dutch Government's financial policies including the 30 percent facility at www.minfin.nl (in Dutch), or visit www.government.nl (in English).

Customs 

You will find extensive information in English regarding duties payable and procedures for individuals and businesses at www.douane.nl. If you move to the Netherlands from outside the EU, you can download an application form from the website for exemptions on ‘removable goods'.

Click to the top of our guide to tax in the Netherlands.

 

Expatica 

Expatica Ask the ExpertOur tax experts are available to answer your tax-related questions on Expatica's Ask the expert section under the 'Tax' category. Updated with the help of Arjan Enneman, Managing Director Expatax BV. Updated 2017.


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3 Comments To This Article

  • Silvere posted:

    on 22nd July 2014, 18:55:15 - Reply

    Sorry but this is not very well explained. I was hoping to get to know how much tax one is likely to pay. I have found the information on wikipedia!
  • Emma Yates posted:

    on 4th April 2014, 09:57:19 - Reply

    Hi, i moved out of my property on which i have a mortgage,, and now find i need to get permission from the municipality (?) to rent it out. Can you please tell me how to do this when i am not in the country? Thanks, Emma

    [Moderator's note: You can also post questions on our Ask the Expert service]

  • Alex posted:

    on 14th March 2014, 13:48:58 - Reply

    My advice would be to not go near BDO. They will take a lot of money form you and do a very c*** job on your tax returns.