The tax-free amount is income on which we do not have to pay tax. It operates in many countries of the European Union and is a chance to recover tax refunds during the annual settlement with the tax office. How does the matter look in the Netherlands? Can we find the tax-free amount here? In today's post we explain this question. Welcome.
Tax-free amount Netherlands - tax rates in 2023.
Let's start with the fact that the Dutch tax system is based on two tax groups. Belonging to them depends on the income earned in a given year and directly affects the tax rate at which we will be settled.
Currently, each person making a tax settlement in the Netherlands is assigned to one of the following tax groups:
- I tax threshold - 36.93% for income up to €73,031,
- II tax threshold - 49.5% for income above 73,031 euros.
The higher tax rate, however, will not apply to all income but only on the excess over 73,031 euros. Taxes in the Netherlands are therefore relatively high by European Union standards, but there are a number of tax breaks to recoup some of the money paid.
Reliefs available in the Netherlands - the tax-free amount
The Netherlands does not have one fixed tax-free amount, but you will find numerous reliefs that affect your tax return.
Tax free amount Netherlands 2023 - general tax relief
The general tax allowance is a relief from income tax and social security contributions. It applies to all taxpayers making contributions to the tax office and filing an annual return.
It depends directly on the amount of income and the number of days worked in the Netherlands - the higher the salaries, the smaller the amount of relief. However, the maximum amount of relief cannot be higher than the accrued amount to be paid in income tax and social security contributions.
Employee relief Netherlands - tax-free amount 2023
The Netherlands also has the Arbeidskorting, or employee relief, which every person legally working in the Netherlands is entitled to take advantage of. It is responsible for reducing income tax, which at the same time increases the amount of income.
Relief for raising a child
Another very popular relief is the Inkomensafhankelijke Combinatiekorting, which is the possibility of deducting a child whose age does not exceed 12 years. It can be used if, you are raising a child and the child has been registered with a parent for at least six months.
Thus, by taking advantage of the available deductions, you will pay lower taxes and contributions - even though the tax base is not reduced as in the case of the tax-free amount, you can increase your return in this way. You must remember, however, that if you want to claim tax benefits in the Netherlands, you must meet one of two criteria - be domiciled in the country for a full year, or at least 90% of your income must come from work in the Netherlands. In the second case, you have to prove it by submitting an EU/EC certificate received from a foreign tax office.
30% tax ruling - relief for specialists
Due to the shortage of specialists in many industries, the Dutch government is trying to bring in skilled immigrants. Thanks to this, taking a job in an occupation on the list prepared by the Ministry of Labor and Finance, we can catch a special relief. The 30% tax ruling allows for a period of 5 years to tax only 70% of the salary. So we can say that the remaining 30% is the tax-free amount in the Netherlands. Reducing the tax base in this way will reduce the overall amount of tax and provide a higher return.
In order to claim this relief, several conditions must be met. First of all, you will need employment based on an employment contract. A fairly high level of income is also required. Your taxable salary must be a minimum of 39,467 euros, or if you are under 30 years old, have a science degree and a minimum of a master's degree then your annual net salary must be a minimum of 30,001 euros.
Settle your tax from the Netherlands with the Aangifte24 app
How do you settle your seasonal work in the Netherlands to get a favorable refund? The best way is with the help of a special tax settlement application Aangifte24. This state-of-the-art tool will help you settle your tax refund annually and take into account all the allowances you would like to claim. Reach for this innovative tool today and enjoy a high tax refund from the Netherlands.
Forget about complex forms, bewildering rules, and endless calls to the tax office. Just input your details into our online Dutch tax refund calculator, and it will quickly clear up any uncertainties, clearly displaying your entitlements. It’s straightforward and quick – exactly how it ought to be! With this help, your tax return will be effortless - try it out today!
