It is compulsory for every individual that resides in the Netherlands to pay taxes. Government expenditures that are (partially) paid for by tax revenues include health care, education, justice, police, road construction/maintenance, social security benefits, care for the elderly and subsidies for housing. The Tax Administration Authority (Belastingdienst) is responsible for tax collection and social security contributions.
- Income Tax
- Levy rebates
- Worldwide income
- Indirect taxes
- Other governmental bodies who levy taxes
- Tax returns
If you live in the Netherlands, you will qualify as a resident taxpayer. If you live abroad and receive income from the Netherlands which is taxable in the Netherlands, you qualify as a non-resident taxpayer. In both cases, you will be subject to Dutch income taxation.
- Income from employment and home ownership (box 1)
- Income from a substantial interest (box 2)
- Income from savings and investments (box 3)
This is also referred to as ‘the box system’. These taxes will be calculated on the basis of your yearly tax return. The wage tax, which is deducted from your salary will be settled with the income tax liability that arises from the tax return.
All taxpayers are entitled to a general rebate against the tax owed: the general levy rebate. On top of this, you may qualify for supplementary rebates against the tax owed.
- Direct taxes
- Corporate income tax
- Dividend withholding tax
- Inheritance tax
- Gambling taxes
- Value added tax
- Excise duty
- Taxes on legal transactions
- Environmental taxes
- Tax on passenger cars and motorcycles
- Motor vehicle tax
- Import duties
- Consumption tax for non-alcoholic beverages and other products
- Tax on heavy goods vehicles
Alongside the central government, three other governmental bodies are permitted to levy taxes. These are the County Council, the Municipality, and the District Water Board. The County Council imposes a number of environmental taxes. Examples of municipal taxes are: property tax and the dog licence fee. The District Water Board mainly levies taxes related to water pollution. When compared with the total revenue from taxation, the contribution through the County Council, Municipalities and District Water Board taxes is marginal: less than 4% of the total tax revenues.
At the beginning of every year, a tax form for the previous year becomes available on the Tax Administrations website.
People who have migrated to the Netherlands during the previous year will receive a so-called M form. This form is not available online and will be sent to your home address. You can also order this form by calling the Tax Service, phone number 0800-0543.
Non-resident taxpayers (individuals whose main place of residence is outside the Netherlands) are required to complete the so-called C form. This form is also available on the tax administrations website.
Besides the annual tax return forms, preliminary tax return forms for the current year are also available. Such forms enable you to claim tax refunds in an earlier stage. If you use these forms, you will not have to wait for the final settlement following your declaration at the end of the year, before receiving your refund.
Although it is the tax administration's goal to make tax matters as easy as possible for you, a basic understanding of the system is still necessary. Due to the fact that you have been recruited from abroad and your personal circumstances may differ from those of Dutch native inhabitants, we advise you to seek assistance from a tax advisor who is specialized in international tax issues.
The 30%-ruling allows employers to grant certain employees, who have special skills or expertise, which are not or scarcely available on the Dutch labour market and who are hired from abroad, a tax-free allowance of 30% of their salary as far as it exceeds the minimum taxable salary criterion for application of the 30%-ruling. Whether or not an employee has the required specific expertise depends on the level of his annual taxable income (for 2016: euro 36,889 for employees of 30 years and older).
The allowance is meant to compensate for extra expenses incurred during a temporary stay outside the country of origin (extra-territorial costs). The ruling is only applicable for a maximum period of 8 years and will be reduced with possible periods of earlier presence in the Netherlands.
This ruling has certain consequences in terms of pension and social security. Employees who are granted the 30% ruling can in principle only accumulate pension on the remaining part of their salary. Under certain conditions it is possible to accumulate pension on the 30%-allowance too. Social security rights en premiums may also be affected. Premiums and social security rights will only be based on the salary excluding the 30%-allowance.
The 30%-ruling is only applicable if the Dutch tax authorities have confirmed the approval. The employer and employee need to file a joint request with a qualifying tax adviser or the Dutch tax authorities to apply for the ruling. The request for the 30%-ruling must be filed within 4 months after the start of the employment. Requests that have not been filed within the 4 months period, will not have a retroactive effect from the starting date of the employment, they will only be granted as of the month following the date of the request.