Taxation in the Netherlands

The Netherlands has some very high taxes, particularly for resident individuals although there are a few tax breaks available for expats. On the other side of the coin, a number of multinational corporations transfer profits via the Netherlands to mitigate taxation in other jurisdictions.

This article offers a brief overview of taxation in the country for individuals. Due to the complex nature of tax matters as well as the language barrier, you are strongly urged to seek qualified professional help when doing your tax return.

Register – Residents of the Netherlands need to have a BSN (burgerservicenummer – citizen service number) which is the fiscal number roughly equivalent to the national insurance number in the UK, social security number in the US or tax file number in Australia. The number is also a general identifier required for other government services and healthcare. Also see 10 essential steps for expats arriving in Netherlands

Dutch Tax Department – The Dutch tax revenue department is known as the Belastingdienst (Belasting=tax, dienst=service). It sends most standard correspondence in a blue envelope – however there are long-term plans to phase this out and go to a digital-only platform.

Most communication and information is in Dutch; tax office staff will generally only speak Dutch, even to foreign clients(!) – although this is slowly changing. There are some explanatory notes and forms in English available; there is some limited English info on its website here; the free telephone tax line for residents (0800-0543). The number for non-resident tax issues in +31(0)55 538 538.

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Dutch Tax Return – If you are working or hold investments in the Netherlands, you may be invited/required to complete a Dutch tax return (aangifte) which covers the calendar year. Tax returns can be submitted online either by an accountant or by an individual. Expect to pay €400-600 for an accountant to prepare a standard Dutch tax return.

Individuals must use DigID, the online identity management platform run by the Dutch government or eIDAS, the equivalent European digital identification service.

Depending on your situation, you can either be fully resident in the Netherlands, partially resident or non-resident for tax purposes. Most people living and working in the Netherlands will be regarded as resident. Being resident means you are taxed on your worldwide income and assets, however you are allowed to use the standard allowances. Those living outside of the Netherlands but receiving a Dutch taxable income will normally be non-resident, although they can deem themselves resident.

If you have moved to or have left the Netherlands during the tax year you will have to fill in the M Form tax return. In other special cases, non-resident taxpayers need to file the C Form; those not living in the Netherlands but deemed resident taxpayers should file the P form. Depending on the deadline date of your tax return, you (or your accountant) can ask for a personal extension of a few months.

Tax returns can be submitted from 1 March.

In a nutshell, the standard Dutch tax return has 3 category boxes for different types of taxable income. Box 1 applies to employment income and home ownership, Box 2 applies to income from a substantial interest in a company and Box 3 to worldwide savings and investments held.

Dutch Tax Rates 2021-2022 (Box 1) – The Netherlands has some of the highest income taxes in the world – progressive tax rate bands apply which include national insurance contributions.

In Europe there are only a few countries which have a marginally higher top rate of tax including Denmark, Greece and Sweden.

An employee earning €100,000 would effectively have to pay around €40,300 in income taxes. For a rough idea of your net salary check this tax calculator.

Lower income taxpayers get a personal tax credit of €2,888 in 2022.

Sole traders (zelfstandigen zonder personeel or zzp) also get a tax deduction (zelfstandigenaftrek) of €6,310 in 2022. This was €6,670 in 2021 and will be reduced in steps over the next 15 years.

Income from a substantial interest (Box 2) – This is charged at 26.9% in 2022.

Family – Married and/or co-habiting couples can be fiscal partners (under certain conditions) which can make the division of income and deductibles more efficient for your combined tax return. There are various tax credits available for those who have children.

30% Rule – If you are recruited or transferred from another country for a position in the Netherlands you may qualify for the 30% ruling – this is where only 70% of your salary will be taxed, effectively lowering the tax rate. You must have “specific expertise” in your field and a minimum salary requirement for the position may apply. To get this ruling both you and your employer must file a detailed application to the tax office. The ruling lasts for 5 years.

Redundancy Payments – If you lose your job any redundancy payment is regarded as income – so you will be taxed at your highest tax rate band. In some cases the tax could be mitigated using longer term insurance arrangements.

Wealth Tax (Box 3) – The Netherlands has a wealth tax on savings, property and investments. The tax does not apply for savings up to €50,650 (individual) or €101,300 (fiscal partners).

The calculation is weighted on a savings part and an investment part and the maximum taxable rate is 31%. For 2022 the taxable tiers on top of the allowance are for assets €0-€50,650 (effectively 0.56%), €50,650-€962,350 (1.35%) and above €962,350 (1.71%).

Corporate Taxes – Corporate tax rates in 2022 are 15% for the first €395,000 and 25.8% on the remainder. Private limited companies are known as bv or besloten vennootschap.

VAT – There is a Value Added Tax called the BTW (Belasting Toegevoegde Waarde) of 21% on most goods and services and a low tariff of 9% for food, medicine and other selected items. If you run a business (ondernemer) then you will need to charge BTW to your clients in the Netherlands; on the other hand you can also reclaim any BTW from your expenses. VAT returns can be done online (monthly, quarterly or annually) through the tax department’s web portal.

Tax Refunds – If you have worked in the Netherlands only part of the year then you may be entitled to a tax refund, due to overpayment of income tax and national insurance contributions. You can request a refund directly from the tax office or during the filing of a tax return.

If you live outside the EU you can request a VAT refund on any goods bought whilst in the Netherlands subject to minimum purchase prices.

Home Owners – Dutch tax residents who own and live in a property with a mortgage can get tax relief on the mortgage interest payments. The future status of this relief is under discussion. Property owners are also liable to pay annual property taxes (OZB, onroerende zaakbelastingen) to the local municipality which is based on the deemed value of the immovable property (known as WOZ, wet waardering onroerende zaken).

Inheritance Taxes – When someone dies whilst resident in the Netherlands then their estate will have to pay inheritance tax subject to certain allowances. The inheritance tax rate varies between 10% and 40% depending on the relationship of the beneficiary to the deceased.

Please note, this article is for information purposes only so we cannot provide any personal financial advice. Tax laws are subject to change so we cannot guarantee accuracy. Please speak to a qualified financial professional.

This article was first published in 2010, last update 9 February 2022.