Tax

Dutch tax system

Taxes in the Netherlands

Types of taxes

 

The Tax and Customs Administration uses your information to determine which taxes you are required to pay, which can include:

 

income tax

turnover tax

corporate income tax

payroll tax

Within a few weeks after registration, the Tax and Customs Administration will send you a letter outlining the relevant information. You may also receive a VAT number and a tax return form. You do not need to submit a separate request for a VAT number.

Tax privilage

 

The Netherlands has one of the most extensive tax treaty networks in the world. • The Netherlands has an attractive low corporate tax rate of 25 per cent (20 per cent for profits up to EUR 200,000). • Double taxation can usually be avoided in the Netherlands. Profits from subsidiaries/branches can be enjoyed tax free due to the full participation exemption and foreign branch exemption. • The Netherlands has a very favorable tax treatment for foreign-owned companies. There are no withholding taxes on interest and royalties, and a reduction of or now it holding taxes on dividend usually applies. • Especially for holding companies, the Dutch tax system has many advantages. • The innovation box, together with other R&D facilities, provides for a highly attractive tax regime for R&D activities. • Expatriates with special qualities may profit from a 30 per cent tax-free allowance on Dutch wage tax.

 

The Netherlands has one of the most extensive tax treaty networks in the world.

In this overview you can learn about how the tax system works in the Netherlands, in particular the annual Dutch income tax return.

 

Different kinds of tax in the Netherlands

Whether you're a Dutch citizen or an expat, you are required to pay taxes if you earn money while living in the Netherlands.

 

The Belastingdienst (Dutch tax office) collects taxes through a variety of streams. Here are the main tax types that you will most likely encounter in the Netherlands:

 

› Income tax (inkomstenbelasting)

If you earn money or are working in the Netherlands then you need to pay tax on your income.

 

You declare your income tax via your annual tax return (aangifte inkomstenbelasting) which can be done online or with the help of a Dutch tax advisor.

 

If you are employed by a company then your income tax will be withheld from your salary by your employer, this is known as wage tax (which is contained within payroll tax).

 

If you are self-employed in the Netherlands then you must calculate and pay your income tax via the annual tax return.

 

Payroll tax (loonheffing)

Payroll tax is tax and other contributions that are withheld from an employee’s salary by the employer, which saves the employee from having to pay them later as income tax. The payroll tax levy is made up of tax on your salary (wage tax or loonbelasting) and national insurance contributions for pensions, unemployment allowance and other state benefits.

 

Your payroll tax is deducted from your salary every month. It's important for expats to keep the deduction in mind when discussing salary and contract terms for a new job. There is a large difference between your gross salary (brutto salaris) which includes tax, and your net salary (netto salaris), after tax is deducted. To calculate your net salary you can download the income calculator.

 

VAT sales tax (BTW / omzetbelasting)

The Belastingdienst also collects taxes via the sales or revenue tax (omzetbelasting), known in the Netherlands as BTW (belasting over de toegevoegde waarde). All businesses, excluding some foundations and associations, must add BTW to the price of their goods and services.

 

There are three different levels of BTW: 0%, 6% and 21% (the most common rate).

 

Businesses (including freelancers) must calculate the BTW they have earned and spent via the quarterly sales tax declaration (BTW aangifte). They then pay this amount to the Belastingdienst.

 

A list of other kinds of taxes can be found at the end of this page.

 

Annual income tax return (aangifte inkomstenbelasting)

Even though wage tax has already been withheld from your gross salary as an advance levy or payment on your income tax, you often still need to complete an annual income tax return. The Dutch tax office will inform you if you are required to do so.

 

The tax return is necessary to balance out your "prepaid" tax with other financial aspects such as:

› your partner’s income

› a mortgage

› additional income, savings or investments

› tax deductions such as study or healthcare costs

 

Do I need to do a Dutch tax return?

The Dutch fiscal year runs from January 1 to December 31. In January you will receive a letter (aangiftebrief) from the Belastingdienst asking you to complete a tax return for the previous year.

 

If your financial affairs are simple and do not include any of the above elements then you may not receive a letter and you may not need to submit an annual tax return.

 

You can always visit a Belastingdienst branch office or call the BelastingTelefoon on 0800 0543 to find out if you need to complete an income tax return and/or to request the letter.

 

What is the deadline for the Dutch tax return?

The time period for submitting your annual income tax return is from March 1 to April 30, unless you or your accountant request an extension (uitstel aangifte). You can do this via the BelastingTelefoon or the Belastingdienst website (you'll need your DigiD). If you do not submit your tax return or request an extension before May 1 then you can be fined.

 

The Box system on the tax return

Income on the Dutch tax return in the Netherlands is divided into three categories: Box 1, Box 2 or Box 3 (named after the tick boxes on the form).

 

Each box applies to different kinds of income and has a different tax rate. Here is an overview of the box categories and their different income sources:

 

› Box 1: Income from salary

Income in Box 1 is taxed at different rates depending on how much you earn, with a maximum rate of 52%. Check the table below to see the rate(s) that apply to your gross salary.

 

Box 1 tax rates for 2017

This table lists the income tax rates / brackets (tarieven) for people below retirement age:

 

Annual taxable income (gross)Total rate

Tax to Pay per bracket

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Box 1 tax rate example for 2015

Here is a sample tax breakdown for an annual gross income of 30.000 euros:

- The first 19.822 euros will be taxed at 36,5%, so tax will be 7.234 euros.

- The remaining 10.178 euros will be taxed at 42% so tax will be 4.275 euros.

- Therefore you will pay a total of 11.509 euros tax (minus general and labour tax credits)

 

Box 1 income includes:

- Wages from your job or employment

- Income from your business

- Income as a freelancer, artist, childminder or professional athlete

- Gratuities such as tips

- Foreign income

 

Box 1 deductions include:

- Deductible costs of home ownership

- Expenditure on income, such as premiums for annuities

-Alimony and other maintenance obligations

- Specific medical expenses

- Temporary stay at a home for the severely disabled

- Tuition costs and other study expenses

- Maintenance of a heritage listed building

- Waived venture capital

 

dutch tax system taxes netherlands

 

Box 2: Income from interest in a limited company

Box 2 covers income from a substantial interest or holding (at least 5%) in a limited company such as a BV. In 2015 and 2016 income in Box 2 is taxed at 25%.

 

 

Box 2 income includes:

- Regular benefits such as dividends

- Capital gains, such as gains on shares

 

› Box 3: Assets and savings

Box 3 covers income from assets such as savings and investments. The value of your assets, minus debts, is calculated once annually, on January 1, to determine your net capital value.

 

Everyone is entitled to an amount of tax-free capital (heffingsvrij vermogen).

 

2016 tax-free capital amounts

In 2016 you can have assets with a value of up to 24.437 euros as an individual, and 48.874 euros as a couple, without them being taxed.

 

2017 tax-free capital amounts

In 2017 you can have assets with a value of up to 25.000 euros as an individual, and 50.000 euros as a couple, without them being taxed.

 

If you are above retirement age then these values are higher.

 

Tax calculated on capital

From January 2017, tax on capital above the tax-free amounts is calcuated according to three brackets:

› assets up to a value of 75.000 euros are taxed at 0,87 percent

› assets between 75.000 and 975.000 euros are taxed at 1,41 percent

› assets above 975.000 euros are taxed at 1,65 percent

 

Previously the Belastingdienst assumed you earnt an income (voordeel) of 4% from the value of your assets. This income was taxed at 30%, which lead to an effective flat tax rate of 1,2% on assets.

 

Box 3 assets include:

- Stocks and shares

- Bank and savings accounts

- A second home or investment property

- Endowment insurance policy (if not connected to an owner-occupied residence)

 

Box 3 exemptions

Some assets are exempt from being taxed in Box 3, these include:

- The property you live in (if you own it)

- Moveable property such as furniture, art or a car (unless they are an investment)

- Certain kinds of insurance

- Investments in forests, nature or certain green, social, ethical, cultural or startup projects

 

30% ruling

The 30% reimbursement ruling is a tax advantage for certain expat employees in the Netherlands. The most significant benefit is that the taxable amount of your gross Dutch salary is reduced from 100% to 70%. So 30% of your wage is tax free.

 

Visit the 30% ruling page for more information.

 

Dutch taxes and non-residents

If you have income from another country, or you live outside the Netherlands and have a Dutch income, then you usually need to do the annual Dutch income tax return.

 

If you moved to or from the Netherlands during the course of the year then filing your tax return can be a wise move as you may be entitled to a substantial tax refund.

 

Tax partners in the Netherlands

The Belastingdienst has a broad interpretation of who your tax partner (fiscaal partner) can be. Most commonly your tax partner is the person you are married to, have a registered partnership with, or simply live with in a relationship.

 

General and labour tax credits

Every taxpayer in the Netherlands is entitled to receive the general tax credit (algemene heffingskorting) and every working person is entitled to receive the labour tax credit (arbeidskorting or loonheffingskorting).

 

Both tax credits are calculated and credited to the tax balance on your salary by your employer, so it is not necessary to do anything to receive them. If you work for yourself then the tax credits are calculated when you complete your annual tax return.

 

The value of your tax credit depends on how much you earn, decreasing as your income increases. In 2016 the general tax credit starts at 2.242 euros for income under 19.922 euros and drops down to zero for income over 66.417 euros. In 2016 the maximum labour tax credit is 3.031 euros.

 

Other Dutch tax benefits

There are several kinds of tax benefits (toeslagen) available in the Netherlands for people on a low income. These include:

› Health care allowance (zorgtoeslag)

› Rent benefit (huurtoeslag)

› Unemployment benefits (WW uitkering)

› Child allowance and childcare benefits

 

Other forms of taxation in the Netherlands

There are many other forms of direct and indirect taxation in the Netherlands. These include:

 

› Import tax (douane)

A tax paid on goods received or imported from abroad. The amount depends on the value of the goods and if you receive them as an individual or for your business. If you, as an individual, receive goods worth more than 45 euros from abroad then you will need to pay minimum 2,5% import duties and BTW. The import tax also applies to internet purchases.

 

Motor vehicle tax (motorrijtuigbelasting)

This tax is paid when you buy or import a motor vehicle, or when a vehicle is put under your name. The amount depends on the type of vehicle (car, van, motorcycle, lorry etc.), weight and type of fuel. It falls under the environmental tax category.

 

› Inheritance tax (erfbelasting)

A tax on wealth acquired by inheritance after someone dies, if their properties and financial affairs were in the Netherlands.

 

› Gift tax (schenkbelasting)

A tax paid on the value of anything accepted as a gift from a resident in the Netherlands.

 

› Corporate tax (vennootschapsbelasting)

Applies to companies that are established in the Netherlands and to those that receive income from the Netherlands but are not established here.

 

› Transfer tax (overdrachtsbelasting)

The transfer tax must be paid by a buyer when purchasing a property or business. The most common form of transfer tax applies when a homebuyer purchases a house or apartment, for which the rate is currently 2% of the property value.

 

Gambling tax (kansspelbelasting)

A gambling tax of 29% must be paid on prizes worth more than 449 euros, won in any game of chance.

 

Dutch tax penalties

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%.

 

Hidden income that is discovered by the Belastingdienst risks a fine of up to 300%.

 

Looking for tax advice? Check out our list of Dutch tax services & advisors in the Netherlands!

Dutch Tax Rules Holland

 

There are various Dutch tax rules that are applicable and are levied by the Dutch government for almost every individual and business within the territories of the country. Almost every kind of income is taxed, and the guardians of the Holland tax rules keep a close watch on almost all major incomes and expenses with exceeding efficiency. An important aspect of this has been a frequent change of the tax rules in Holland. There are some very prominent popular terms that keep circulating, such as the thirty per cent rule, the 183 day rule, and various others such. A very brief overview and summarized explanation of the kinds of Dutch tax rules in the Netherlands are as follows:

 

Dutch VAT Independent businessmen, including natural persons, corporate bodies, partnerships and associations come under the purview of Dutch VAT. Dutch VAT is applicable for most businesses operating in the Netherlands. Rates are differentiated between essentials and luxuries, and the rates vary accordingly, as per the updated tax rules in Holland

 

Dutch Income Tax All Dutch residents are liable to pay their income tax based on their worldwide income, and in accordance to the Dutch Income Tax rates applicable to them. The three primary categories of taxable income in Holland are: taxable income from work or home, taxable income from substantial interest and taxable income from savings and investment, all of these are taxed as per the prevalent dutch tax rules at the time.

 

Inheritance and Gift Tax Dutch Inheritance taxes, an important component of the Holland tax rules, is generally applicable to the beneficiaries of an inheritance in Holland and are generally paid by the beneficiary. The rates applicable as per Dutch Tax Rules are dependent on the relationship between the heir and the testator, categorized as spouse/partner, siblings/parent or other ascendants and other recipients.

 

Wage Withholding Tax Dutch Tax rules pertaining to the Wage withholding tax laws state that every supplier of staff is the withholding agent of the wage tax, as well as national insurance and employee insurance contributions owed in the Netherlands. This is also applicable, as per the latest tax rules in Holland, to all foreign employers and foreign employment agencies that make staff available in the Dutch labour market. The withholding obligation in the Netherlands arises regardless of the way in which an employee is supplied.

 

Corporate Tax All registered Dutch Companies are subject to corporate tax , in accordance with the tax rules in Holland, which is usually around the 25% figure, on its worldwide profits. Certain items of income, however, are exempt from tax rules in Holland and certain costs are non-deductible, depending upon the prevalent legislation at the time. The current Dutch corporate income tax rate can be found here.

 

Property Tax Real estate taxes in the Netherlands are based strictly, as per the tax rules in Holland, on the market value of the property and are paid by both the landlord and the tenant, if different. Each municipality in Holland, complies to the tax rules in Holland prevalent at the time and determines its own real estate tax tariff, and these are revised every four years. The real estate tax tariffs are usually between 0.1 and 0.3 percent of the property value, as per the Holland Tax Rules

 

The information provided above is from the Dutch Tax and Custom Administration, the primary government Authority governing Holland Tax rules

 

Often, for a visitor or ordinary citizen, several common questions pertaining to Dutch Tax rules, like what are the changes in tax rates, how to get tax credits and relief, tax returns and their deadlines, deductions and how to go about paying the tax can lead to a lot of wastage of time searching for the right information, and inconvenience. It is advisable, under those circumstances, to seek out a reliable and reputed Dutch Tax Accountant who clearly understands the tax rules in Holland with the necessary licenses and credentials, for assistance and guidance.

 

A very interesting shift in trend in Holland Tax Laws is that tax rates have actually been reduced in the last few years, substituted by a general sweeping removal of some major tax deduction policies, too. However, there are certain tax benefits that still exist and make for very attractive tax structures that make the Netherlands Tax Laws stand out from among many others in Europe.

Taxes

 

The Dutch Tax and Customs Administration does impose certain rules on foreign service providers, concerning the payment of tax in the Netherlands:

 

The Dutch Tax and Customs Administration will view you as a foreign entrepreneur if you are not established in the Netherlands. This is the case if you do not have a permanent establishment in the Netherlands. In this case you may still need to pay Dutch income tax, but the rules are different.

If your company is established outside of the Netherlands, and you do business with the Netherlands, you will encounter specific Dutch VAT rules. You can read up on how to calculate VAT on the website of the Dutch Tax and Customs Administration. If you are established in the Netherlands or if you have a permanent establishment here, you will be subject to the same VAT rules as other entrepreneurs in the Netherlands.

If you run a business in the Netherlands or employ personnel in the Netherlands, you will likely have to pay payroll tax and social insurance contributions. This is true even if you have an establishment outside of the Netherlands.

 

http://www.answersforbusiness.nl/regulation/crossborder-establishment

Annual Tax form

 

 

Just like for most official issues, expats can complete their tax declaration (Belastingaangifte) online:

 

Annual Dutch tax form steps

› Apply for a DigiD.

 

› Look at your Jaaropgave (last-year overview of your income obtained by your employer) and highlight:

- Gross salary (Fiscaal loon)

- Tax & insurance contributions (Loonheffing)

- Tax credits (Arbeidskorting) if applicable

 

› Visit the website of the Belastingdienst (Dutch tax office), download the official program (available for MAC, Windows & Linux) and fill in the key numbers mentioned above (Gross salary, tax and insurance contributions as well as tax credits) in the Werk en woning section (left sidebar).

 

Alternatively, first fill in your personal data and income details and then press Overzight before sending your form to the Dutch tax office. The box next to Te betalen will specify whether you qualify for a tax return or you are obliged to pay a supplementary amount.

 

› Enter your digital signature and a notification form (receipt) will be sent to you a few days later.

 

Note that the above procedure is based on the hypothesis that you do not own a property or have other sources of income apart from your main work.

 

annual dutch tax form

 

Hints & Tips on the annual Dutch tax form

› The Dutch tax rate system is one of the highest in Europe.

 

› The whole procedure must be completed by April 1st. Nevertheless, extensions are possible.

 

› Tax officers are not allowed to speak English on the phone!

 

› You can always consult a tax expert.

 

› Those who started working few months before the end of the year can qualify for full tax return.

 

› Sooner or later, all professionals will receive the blue envelope (below).

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