Home > Taxation in the Netherlands

Persons residing in the Netherlands have to pay income tax based on their earnings. The income tax is sub-divided in three main categories:

• Taxable income from work and dwellings
• Taxable income from substantial interest
• Taxable income from savings and investments

Taxable income from work and dwellings is an ascending scale with four brackets:

  - 33.60% on the first EUR 17,579
  - 41.85% on the next EUR 14,010
  - 42% on the next EUR 22,271
  - 52% on the remainder

Taxable income from substantial interest;
This kind of income is charged at a fixed rate of 25%

Taxable income from savings and investments
This kind of income is charged at a fixed rate of 30%

Besides, all those who are in paid employment are subject to wage tax. The wage withholding tax consists of one amount made up of wage tax and social security contributions. The Netherlands levies social security contributions reserved for the old age pension (AOW), surviving relatives benefit (ANW) and exceptional medical expenses (AWBZ). Other tax categories such as income tax on world-wide income, environmental taxes, VAT for entrepreneurs and corporate income tax may apply.

Expatriates who come to live and work in the Netherlands need to pay tax as well. When you arrive or leave the Netherlands you do not need to pay tax for a full calendar tax year. Consequently an M-form (migration) must be filed. From then onwards the P-form (Private individual) comes into force and you will receive the same tax return as a normal Dutch citizen.
Generally you will receive a tax return form whenever you owe money or when you are entitled for a refund. In case you do not receive the tax form by the 1st of August, you need to request the form yourself. When you don’t owe the tax office money you are not obliged to file a tax return form. However it is advisable to do it in case you are entitled for a refund.   

The 30% ruling

When you come to work in the Netherlands you may face additional expenses more commonly known as extraterritorial expenses. To cover up for these extraterritorial costs, the Dutch government has created the so called 30% tax-ruling. This means that your employer can pay 30% of your salary, including the allowance free of tax.

Amongst others, extraterritorial costs may include:

1. finding suitable accommodation;
2. the cost of double housing in case your family continues to live in the country of origin;
3. higher costs of living than your country of origin;
4. language courses;
5. suitable schools for children;
6. costs for applying for and translating permits and official documents such as residence permits, visas and driving licences;
7. storage costs in case if you decide to move your furniture to the Netherlands;
8. costs for consultancy for Dutch tax return;
9. costs of phone calls to your country of origin;
10. travel costs between the Netherlands and your country of origin.  

Which employee qualifies for the 30% tax-ruling?

In order to qualify for the 30% tax-ruling, the employee must meet two fundamental requirements:

1. the employee must be hired from another country than the Netherlands;
2. the employee must have specific expertise that is scarce or absent on the job market in the Netherlands.

Specific expertise that is scarce or absent on the job market in the Netherlands depends on:

1. the employee’s level of education;
2. the employee’s working experience relevant to the position;
3.  the salary of the function concerned in the Netherlands in comparison to that in the country of origin of the employee.

In case the expatriate does not qualify for the 30% tax-ruling, then the incurred extraterritorial costs can be reimbursed tax-free by the employer