The Dutch tax system, especially for expats, is anything but simple. However, once you understand it, you will be able to easily navigate it.
If you earn money while living in the Netherlands, you need to pay taxes. The Netherlands is a socially conscious country, and higher earners can expect a substantial taxation of their salary (up to 49.5%). However, your personal situation, type of work, residency status, and other assets and earnings (particularly from abroad) will affect your position considerably.
Furthermore, different rules apply to self-employment taxes in the Netherlands. This guide to the Dutch tax system includes the following information for expats:
- The tax system in the Netherlands
- Federal taxes in the Netherlands
- State and regional taxes in the Netherlands
- Taxes on goods and services (VAT) in the Netherlands
- Who has to pay tax in the Netherlands?
- The Dutch tax system for foreigners
- Income tax rates in the Netherlands
- Tax on property and wealth in the Netherlands
- Inheritance tax in the Netherlands
- Company taxes and VAT rates in the Netherlands
- Tax advice in the Netherlands
- Useful resources
The tax system in the Netherlands
The Dutch tax office (Belastingdienst) is an entity of the Ministry of Finance, and is responsible for collecting taxes and social security contributions. Tax revenues largely finance government expenses. This includes subsidies for arts and culture, housing, childcare and healthcare, pensions, and social security benefits.
Dutch tax resident
When you become a Dutch resident and earn an income in the Netherlands, you need to file a Dutch income tax return and pay taxes in the Netherlands. So what does this mean?
If you have demonstrable ties to the Netherlands (for instance, you live or work in the country), then you are a resident taxpayer from day one. As a resident taxpayer, the Dutch tax system taxes 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. Those who are eligible for the 30% ruling may choose to be part of the partial non-resident taxpayers’ category.
The Dutch tax system
In the Netherlands, you pay tax on your income, wealth, and assets, and the amount of tax you pay depends on your income. The Dutch tax system divides different types of taxable income into three “Boxes”, each with its own rate, as follows:
- 1: taxable income from profits, employment, and homeownership: wages, pensions, social benefits, and WOZ value of the owner-occupied property;
- 2: taxable income from substantial interest;
- 3: taxable income from savings and investments
Non-resident taxpayers can claim a basic allowance in tax Box 3 when determining their benefits from Netherlands-based investments and savings. This potentially lowers their Dutch tax rate in certain situations.
A percentage of your monthly salary is automatically deducted by the Tax Administration (Belastingdienst). However, at the end of each year, you need to file a tax return (belastingaangifte) and declare your income and assets. You will receive a final tax notice and, in some cases, get a tax rebate.
Federal taxes in the Netherlands
The Ministry of Finance (Ministerie van Financiën) works on the national tax legislation. The Dutch Tax Administration (Belastingdienst), which is part of the Ministry of Finance, levies and collects the taxes.
Some categories of direct taxation levied by the national government are:
- income tax
- corporate tax
- inheritance and gift tax
- transfer tax
Besides the direct taxation for individuals, the Dutch government also charges some indirect taxes, as follows:
- value-added tax
- excise duty
- taxes on legal transactions
- environmental taxes
- tax on passengers cars and motorcycles
- import duties
- consumption tax for non-alcoholic beverages and other products
- tax on heavy goods vehicles
State and regional taxes in the Netherlands
The Belastingdienst is the main government organization in the Netherlands which collects taxes, however it is not the only one. Regional water boards (waterschappen) have rates for flood protection (maintenance of dykes and control of water levels) and clean water. If you own land, buildings, or nature reserves in the Netherlands – or if you occupy/use commercial premises – you have to pay water authority tax (waterschapsbelasting) annually. Water authority tax consists of a water purification levy, a pollution levy, and a water system levy.
In addition to the national taxes, every resident in the Netherlands must pay local taxes to his/her city council (gemeente). In general, the municipality is responsible for the following taxes:
- property tax
- waste collection charges
- street cleaning/maintenance
- tourist tax
- sewerage tax
- movable property tax (houseboats, portable kiosks)
As in many other municipalities in the Netherlands, Amsterdam collects local taxes from its residents. In addition, the city charges hotels and other forms of tourist accommodation tax. This money goes towards municipal improvements. As of 1 January 2020, the City of Amsterdam is asking for a larger contribution from visitors staying the night in hotels or camping sites. On top of the current 7% tourist tax, a fixed amount will be charged for hotel rooms; €3 per person per night. Camping sites will be charged €1 per person per night.
Tourist tax for holiday rentals, bed & breakfasts, and short-stay accommodation will be 10% of the turnover; excluding VAT and tourist tax. If you offer paid accommodation to visitors from outside the city, you must pay a tourist tax (toeristenbelasting).
Also from 1 January 2020, Amsterdam intends to introduce an advertising tax in order to reduce the amount of on-street advertising in the city. This includes window advertising, advertising on façades, flags, bus and tram shelters, and large menus. Essentially, the greater the visibility of the advertising, the higher the tax.
Despite this, the contribution made by provincial, municipal, and water control authority taxes is only 4% of the total revenue from taxation in the Netherlands.
Taxes on goods and services (VAT) in the Netherlands
The Dutch name for value-added tax (VAT) is BTW (Belasting Toegevoegde Waarde). Sales tax in the Netherlands applies when you sell or buy goods or services. If you have to charge (or pay) BTW in the Netherlands, it will be one of the following tariffs:
- A 9% Dutch BTW rate, commonly known as the low tariff, applies to the sale of common products (e.g., food, drink, agriculture, medicines, books). You can find an extensive list of goods and services for this tariff in the link Tarieven en vrijstellingen (only available in Dutch);
- A 21% Dutch BTW rate, also called the high or general tariff, applies to all other VAT taxable activities;
- Some goods or services are exempt from BTW (0%), such as international activities. This mainly involves the supply of goods from the Netherlands to another EU country and some services related to cross-border transactions; such as services work on goods that are exported to non-EU countries.
More information on sales tax in the Netherlands, visit the Belastingdienst.
Can you get a refund on VAT?
Some tourists and visitors may be eligible for a VAT tax refund on purchases made in the Netherlands. To qualify for a refund, you must meet the following criteria:
- permanently live outside the European Union
- purchase a minimum amount of €50 per shop per day
- take your things back home yourself, unused and within 90 days
To claim back the VAT, you must purchase the item(s) from a retailer that participates in the refund scheme. Not every shop does, however the affiliated shops display a sticker on their door indicating they do.
How to claim back VAT
When you are paying for the item(s), you must ask the shopkeeper for the VAT form. Then you need to complete the form with your personal information and attach the original receipt. At the airport, before boarding your flight, you must go to the Customs desk with your tax-free form (with the original receipt attached to it), your documents (passport and boarding pass), and your purchases. There, your form will be stamped and you will need to request your VAT back through the tax refund partner; which is affiliated with the shop(s) where you made your purchases. The VAT refund can be deposited on your credit card or cashed in a currency of your choice.
If you are in a hurry or have already passed the security checkpoint, you can post the complete and stamped tax-free forms in a special mailbox. The amount will be credited to your credit card within a few weeks.
Who has to pay tax in the Netherlands?
Are you a resident of the Netherlands?
According to Dutch law, some personal circumstances will define if you are an official resident in the Netherlands or not. You need to take into consideration some parameters to determine your situation. For example, the length of your stay in the Netherlands, where your home and family (partners) are, and where you work.
The amount of tax you have to pay in the Netherlands will depend on your residency status. There are four categories in which you can fall into:
If you are a resident taxpayer in the Netherlands, you will pay taxes on your entire income worldwide; therefore it makes no difference where in the world you earn your income. The tax office considers any business, employment, or investment earnings or income in the form of periodic benefits as taxable.
If you are a non-resident taxpayer in the Netherlands, you will only pay tax on any income that may be levied in the country. This includes employment income, running a business, periodic benefits, income from real estate in the Netherlands, or part of a shareholding in a Dutch company. However, some income earned outside of the Netherlands may be also taxable.
Qualifying non-residents taxpayers
If you live outside the Netherlands, but pay taxes in the country on most of your annual income, you fall under the category of a “qualifying non-resident taxpayer”. If you live in an EU or EEA Member State, Switzerland, or one of the BES islands (Bonaire, Sint Eustatius, or Saba), you are part of this category. As a qualifying non-resident taxpayer, you must pay taxes in the Netherlands on more than 90% of your worldwide income. This means that you can enjoy the same deductions, tax credits, and tax-free allowances as resident taxpayers.
Partial non-resident taxpayers
If you come to live in the Netherlands and you are eligible for the 30% ruling benefit for incoming employees, you can choose the partial non-resident taxpayer status. If you have this status, you are considered a non-resident taxpayer for part of the income tax. Essentially, if you opt for this, you will pay less tax in the Netherlands.
The Dutch tax system for foreigners
When you move to the Netherlands, you will attain resident taxpayer status. This means that you will be paying income tax and social security contributions. However, if you have specific expertise, you may be subject to special tax rules.
The 30% ruling
The 30% ruling is a tax incentive for employees, who are recruited from abroad and bring specific skills to the Netherlands. The fiscal benefit is calculated based on your gross annual salary. From this total amount, 30% is free from income tax. Furthermore, except for pension premiums, all your bonuses, holiday allowance, other benefits fall under the ruling.
The 30% ruling is coordinated and supervised by the Belastingdienst (Dutch tax office), and your employer must agree that the 30% ruling applies to your situation before you start the application procedure.
Since 1 January 2019, the duration of the 30% facility has been reduced from 8 to 5 years. For foreign workers whose 30% facility is due to end in 2019 or 2020, as a result of this reduction, the government will implement a transition period.
If you earn income from abroad
However, if you live abroad but do you have income in or from the Netherlands, or you have possessions in the country, you can opt to be treated as if you have a resident taxpayer status for the whole year. If you use this option, you also state your worldwide income in the Netherlands.
Stating your income from abroad does not always mean that you have to pay income tax on this in the Netherlands. In order to avoid having to pay income tax in several countries, you are entitled to an income tax relief in the so-called double tax relief. The relief from double taxation for resident taxpayers can be provided by way of an international tax treaty or under domestic rules.
It is important to be aware of the rules between your country and the Netherlands to avoid future problems with the tax departments of both countries. To reduce global tax evasion, 97 countries have signed the Automatic Exchange of Information (AEOI), an agreement that allows the exchange of information between countries without having to request it.
Income tax rates in the Netherlands
Besides the wage tax that you automatically pay during the year – withheld from your gross salary every month – you will probably need to pay an annual income tax return. This is when other aspects of your financial life will be taken into account; such as a mortgage, a partner’s income, savings, investments, tax deductions like healthcare costs, and so on.
The total amount of tax payable is calculated by applying the various Dutch tax rates to the different 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.
The three income boxes
The three boxes of income are treated differently for tax purposes on the tax return. They are also subject to different tax rates within the Dutch tax system. Basically, there are three types of taxable income, as follows:
- Box 1: income from profits, employment, and homeownership. This includes wages, pensions, social benefits, company car, and WOZ value of an owner-occupied property. Maximum rate of 49.5% applies;
- Box 2: income from substantial interest at a 25% tax rate;
- Box 3: income from savings and investments at a maximum 30% tax rate. Income from a property, for instance, owned but not lived in as a main residence, is taxed here. Note that it is not the actual income that is taxed, but the value of the asset.
In 2020, the Dutch tax office reduced the number of tax brackets in Box 1 to two (it is currently 3). Earnings up to €68,507 are taxed at 37.35%, while those over that threshold are taxed at 49.5%. As a result of these declining tax rates, a lot of people will benefit from higher net salaries. Meanwhile, pension-age residents are typically allowed an extra threshold of 50%, up to a certain amount.
If you have a tax partner – i.e. you are married, have a registered partnership, or someone is registered at your address – this may affect the tax you have to pay; as well as any tax rebates. Freelancers and self-employed professionals are considered entrepreneurs for the purposes of turnover tax (VAT). This means that they must charge and pay VAT on their income. If your income is low, you can apply for the small business tax scheme (kleineondernemersregeling). Some services are exempt from VAT, such as journalists and translators.
How to file your income tax return in the Netherlands
Most people can file their tax return online. However, in some cases, it is necessary to file a paper tax return. For example, this applies if you only lived in the Netherlands for part of the previous year or file a tax return for a deceased person. In both cases, you must have some personal information at hand; as well as details about your income, bank accounts, and property.
To file your tax return online you will need your DigiD or a username/password combination. Depending on your case, you will need to complete a specific form (C Form, P Form, M Form, and so on). For further information, you can visit a Belastingdienst branch office or call the BelastingTelefoon on 0800 0543.
Paying provisional tax
After you submit your tax return, you will get a provisional assessment first and, later, a final assessment. The provisional assessment is a temporary calculation based on the information you provided in your form; but which has not yet been checked by the tax administration. You can pay your provisional assessment – or receive the tax refund – into a Dutch or foreign bank account. Once the tax office has checked the information you entered, you will be given a final assessment. If the final calculation differs from the provisional calculation, you will either get a refund or have to pay the difference.
The fiscal year in the Netherlands runs from 1 January to 31 December. The period for submitting your annual income tax return is generally from March 1 to April 30 of the following year. If you miss the deadline, you will receive a fine.
Read more in our Guide to filing your Dutch tax return.
Self-employed income tax in the Netherlands
An entrepreneur who must charge and pay VAT on their income won’t be considered an entrepreneur for the purposes of income tax automatically. For the latter, you will need to satisfy several conditions. If you don’t fulfil these criteria, and you are not employed by your customer, you are not entitled to claim certain tax deductions that are available to entrepreneurs. However, you may claim expenses related to your work.
When you are starting a business, you need to file digital tax returns. The income tax return for entrepreneurs is the same as it is for citizens. You can file digital tax returns via “My Tax and Customs Administration” (Mijn Belastingdienst), or via “Entrepreneur login window” (Ondernemers); both are only available in Dutch.
Tax on property and wealth in the Netherlands
Onroerendezaakbelasting (real estate tax) is a property tax in the Netherlands, which is calculated on the deemed rental value of the property. The term for this is WOZ-waarde, or immovable property tax. Each municipality determines its own Dutch property tax rate; in general, this ranges between 0.1% and 0.3% of the property value. The municipality uses these funds for investing in community activities, education, and maintaining public areas, such as playgrounds and parks.
Read more on Buying a property in the Netherlands.
If you buy a house or other property, you must also pay a transfer tax (overdrachtsbelasting). This applies if you are the legal or beneficial owner of: properties, rights in real estate, or shares in immovable bodies such as buildings.
If you rent out a property in the Netherlands that you own, the value of the property – the WOZ-value – is taxed, minus the mortgage amount. This is taxed annually in Box 3, where you state any income from savings and investments in the Netherlands. When you choose to rent your property, you no longer deduct the mortgage interest. If you live outside of the Netherlands while letting a Dutch property, not all assets fall under this category.
Inheritance tax in the Netherlands
Residents in the Netherlands may also be subject to Dutch inheritance tax (erfbelasting) or gift tax. In this case, foreigners can opt to apply the inheritance law of their home country. Inheritance consists of all assets and debts that a deceased person leaves behind; for example, a sum of money or a precious object. The amount of money that you can inherit before having to pay tax is dependent upon your relationship with the deceased. Dutch inheritance tax rates and gift tax rates are the same.
The 2020 rates for inheritance tax in the Netherlands are:
- Spouse/partner and children: 10% on inheritance below €126,723; and 20% on any inheritance above the threshold;
- Grandchildren: 18% below €126,723; 36% above;
- All others: 30% below €126,723; 40% above.
Read more in our guide to inheritance tax in the Netherlands.
Company taxes and VAT rates in the Netherlands
Public and private companies in the Netherlands are subject to Dutch corporate tax on their profits. In 2020, if the taxable amount is less than €200,000, a corporate tax rate of 16.5% applies. However, if the taxable amount is €200,000 or higher, companies are liable to pay a corporate tax rate of 22.5%. That said, the lower rate will decrease to 15% in 2021; and the standard rate will reduce to 20.5% in 2021.
Certain companies can apply for an exemption to access lower corporate tax rates. However, non-resident entities only have a limited tax liability concerning income from Dutch sources.
If you supply goods or services in the Netherlands you will probably need to charge VAT. You must show the amount clearly on the invoice. There are 3 different VAT tariffs: 0%, 9%, and 21%.
Import and export taxes in the Netherlands
If you import goods into the Netherlands from outside the European Union (EU), you will usually have to pay import duties and VAT. In some cases, you also have to pay excise duty, consumption tax, and other levies.
Import duties are levied on imported goods. The authorities collect the duty and transfer the sums collected to the EU. All member states can retain a portion of the import duties that they collect to cover collection costs. However, while customs authorities don’t levy import duties on products traded between EU member states, VAT is payable. The VAT rate is the same as that which applies to supplies of goods and services in the Netherlands.
Excise goods such as alcoholic beverages, tobacco products, and mineral oils have to pay excise duty. Consumption tax is also payable on imports of non-alcoholic beverages.
In some cases, other levies are payable on imported goods – for instance, agricultural products or industrial products – to prevent products coming onto the European market at exceptionally low prices.
Tax advice in the Netherlands
As the Dutch tax system can be fairly complicated, there is a wide range of taxation professionals and services in the Netherlands ready to help you. Furthermore, many of them offer their services in English or other European languages. You can find a list of tax advisors in Amsterdam in our directory.
The website Business.gov.nl also provides a list of several Dutch organizations that can provide information for freelancers and self-employed professionals.
- The Dutch tax authority (Belastingdienst): This provides extensive information in English and offers downloadable forms and brochures about the Dutch tax system. However, e-mail queries are not possible.
- TaxLine: 0800 0543. The central information line for residents, agents only speak Dutch; Monday to Thursday: 8:00–20:00, Friday: 8:00–17:00.
- 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, as well as those classified as non-residents.
- The Ministry of Finance: Provides details of the Dutch government’s financial policies including the 30% facility in Dutch; as well as information in English.
- Dutch customs authority: Provides information in English regarding duties payable and procedures for individuals and businesses. If you move to the Netherlands from outside the EU, you can download an application form for exemptions on removable goods.