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The tax system in the Netherlands

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Taxes, of course, are how the government acquires its income, and are therefore a critical part of a functional democracy. Taxation in the Netherlands is taken seriously, but the system is fair and is following objective regulations. the amount that will be held from your salary depends on your personal circumstances (e.g. role, residency status, income from abroad).

General tax information

In a nutshell, if it is worth more than €1,000, you can assume that taxes will have to be paid on it, whether that refers to investments, work, or salary. Owning real estate (as opposed to renting), automobiles, and financial gifts are all required to be reported to the Belastingidienst (tax agency), in addition to your standard income tax. Furthermore, the gemeente in which you live may have their own taxes, through which they fund things like road work and installing cycle tracks. There is also the VAT, or BTW as it’s abbreviated in Dutch, which is essentially a sales or labor tax and is typically calculated at 21%, but it can depend on the good/service being taxed.  

VAT is typically calculated into the price of goods, though service providers usually add it as a separate item. Income tax is likewise automatically deducted from your paycheck. Other taxes (for automobiles, real estate, etc.) must be calculated and paid every year.

Tax rates are relatively high in the Netherlands: for who make up to €19,982 per year are taxed at 36.5%. It then increases to 40.8% for those making up to €67,072 per year. Those who make above €67,702 per year are taxed at 52%. At the same time, there are numerous tax credits available that you can use to lessen your tax burden. Tax credits for having children, starting your own business, and using public transportation are quite generous.

The 30% rule

The 30% rule applies to certain highly-skilled workers who are employed by companies within the Netherlands to fill certain roles that could not be filled by Dutch workers. This rule allows you to reduce your taxable income by 30%, and you receive that amount so that you are paid 100% of the salary.  

However, it is not easy to qualify for this ruling; your employer must first apply for this exemption, and there are many requirements you must satisfy, including distance of prior residence and minimal salary levels. It is best to discuss this with a qualified tax professional.   

Online filing

The deadline for filing your taxes is currently 1 May. The form is on the Belastingdienst website, and you will need a DigiD in order to log in. You will also need a jaaropgave (yearly financial summary) from your employer, which you should receive in the mail at the end of the fiscal year.  

The tax form is only available in Dutch. If you have questions about the form or the procedures in general, you can call or email the Belastingdienst, but be forewarned that they are not permitted to respond in English.

 

M form

Foreigners who have not lived in the Netherlands for a full year cannot fulfill the jaaropgave. They will be required to fill the M form, which is available through the website.

 Useful links:

Ministry of Finance
Deloitte – Netherlands tax guide

We do our best to provide accurate and up to date information. However, if you have noticed any inaccuracies in this article, please let us know in the comments section below.
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