Certain expats are entitled to Dutch tax benefits. This guide to tax in the Netherlands explains the Dutch tax system and how to calculate your net salary.
The Netherlands is a socially conscious country, and higher earners can expect to pay a substantial proportion (up to 52%) of parts of their salary to the taxman. But your personal situation (a 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, provided by online tax service Tax Direct, delves into the details and explains:
- Are you a Netherlands tax payer or non-resident taxpayer?
- Tax in the Netherlands: Dutch tax rates and Dutch income calculator
- Dutch tax numbers
- Dutch VAT rates
- Deadlines for paying taxes in the Netherlands
- Dutch tax refunds, tax credits and allowances
- Mortgages and Dutch tax implications
- Property tax in the Netherlands
- Dutch inheritance and gift taxes
- Corporate tax in the Netherlands
- Amsterdam taxes and advisors
- Contacts for tax in the Netherlands
Tax Direct's specialists know all the tricks (and pitfalls!) of the trade. When they file your Dutch income tax return (your own or your company's, if you are an entrepreneur), they minimize your risks and maximize your refunds. This online tax service is designed to make your life as easy as possible: you register, they send you a checklist, you upload the requested documents, and ta-daaa! Your taxes are taken care of, by experts.
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% ruling (see below). Read more in our guide to rules for non-resident taxpayers.
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% Dutch tax rate.
- Box 2: Income from substantial shareholding (5% minimum holding) at a 25% tax rate.
- Box 3: Taxable income from savings and investments at a 30% 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.
Each resident in the Netherlands is entitled to a tax-free capital threshold, set at €30,360 in 2019 for an individual (or €60,720 for fiscal partners).
Box 3 income tax falls in to three brackets, meaning you’ll be taxed at 30% on the following representative rates of return:
2019 box 3 rates:
|Savings/investment amount||Considered return|
Pension-age residents are typically allowed an extra threshold of 50% up to a certain amount.
Non-resident taxpayers are allowed to claim a basic allowance in tax box 3 when determining their benefits from Netherlands-based investments and savings, potentially lowering their Dutch tax rate in certain situations.
Dutch tax rates
The Dutch government is set to reduce the number of income tax brackets down to two in 2021. In 2019, however, three bands will operate as follows:
- Up to €20,384: 36.65%
- €20,384–68,507: 38.1%
- €68,507+: 51.75%
- Up to €68,507: 38.1%
- €68,507+: 51.75%
On top of this, Dutch social security tax is paid at a rate of 27.65% in 2018 (or 9.75% 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.
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.
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 9% Dutch, commonly known as the ‘low tariff’, is applied to the sale of common products (food, drink, agriculture, medicines, books etc.).
- A 21% 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.
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. 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.
Filing US taxes from the Netherlands
Despite the fact that every US citizen and green card holder is required to file a tax return with the IRS even when living abroad, many expatriates still fail to do so. Many are unaware of these obligations, thinking that as an expat they do not need to pay or file tax returns in the US. You do! For more information and help filing your US tax returns from the Netherlands, contact Taxes for Expats and see our Guide to taxes for American expats.
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 fewer 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 2019 is capped at €2,477 for low-income earners, gradually decreasing (at a reduction rate of 5.147%) to zero for high-income earners (above €68,507); for state-age pensioners, the maximum credit is €1,268. 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 (€1,596). 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 2018 for low-income earners starts at €3,249 (or €1,418 for retirement-age residents), decreasing at a reduction rate of 3.6% to zero credits for high earners.
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.
The 30% 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% of the sum of wages and allowances.
Applications (completed by both employer and employee) should be made to the Belastingdienst Kantoor Buitenland in Heerlen. More is explained in our guide to the Dutch 30% rule.
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%) 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.
Onroerendezaakbelasting (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% and 0.3% of the property value. Read more on buying a property 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.
Public and private companies in the Netherlands are subject to Dutch corporate tax on their profits. If the taxable amount is less than €200,000, a Dutch corporate tax rate of 19% applies; if the taxable amount is €200,000 or higher, companies are liable to pay a Dutch corporate tax rate of 25%.
The standard rate will be reduced to 22.55% in 2020 and 20.5% in 2021. The lower rate will decrease to 16.5% in 2020 and to 15% in 2021.
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.
In 2015, the government raised the penalties for undeclared income. Hidden income found by the Belastingdienst risks a fine of 300%, while voluntary declarations of hidden income, wealth and gifts/inheritance are fined at 60% (up from 30%).
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 2018, laws came into force meaning voluntary disclosure would still be an option for some taxpayers, but not for those with unreported savings and investment income.
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.
Amsterdam city council requires every tourist to pay 7% city tax on their accommodation, which is typically included in the price. This contribution is put towards city improvements. Homeowners instead pay the yearly Dutch property tax (onroerendezaakbelasting) 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.
Dutch tax authority: Belastingdienst
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.
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’.
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