Tax in the Netherlands - how many percentauthor:
The amount of taxes in a country is a very important factor in determining the living conditions in that country. It is an issue that you should certainly familiarize yourself with before you decide to leave and take up employment. In today's post, we outline how much tax from the Netherlands and how it will affect your final income in the country. We invite you to read.
How much is income tax in the Netherlands?
The authority that handles all tax matters in the Netherlands is the tax authority - Belastingdienst. Every legally employed employee in the country will pay personal tax contributions (Inkomstenbelasting), which will be collected by the employer from the monthly salary. So no surprise here, such a system also applies in other EU countries.
Earnings for work in the Netherlands are among the highest in Europe. Unfortunately, the rates of income tax that we will have to pay on the income earned are also quite high. Taxpayers in the Netherlands are divided into 3 groups, the so-called boxes:
- persons receiving income from employment contracts, self-employed and freelancers,
- persons receiving income for participation in companies,
- persons living off their own savings - for example, by investing them.
The vast majority of taxpayers qualify for box 1, thus paying high rates when settling their taxes in the Netherlands.
Two tax thresholds in the Netherlands in 2023
There are currently two tax thresholds in the Netherlands. Until recently, until 2020, there were as many as 3 tax rates for box 1 taxpayers in the Netherlands. Although this is a thing of the past, it is worth mentioning that they were 36.65%, 38.05% and 51.75%, respectively.
In 2020 there were changes to the system and the income tax rates were updated - currently (in 2023) there are only 2 tax thresholds:
- a tax of 36.93% for income up to €73,031,
- a tax of 49.50% for income above 73,031 euros.
The higher tax will, of course, apply to the excess over €73,031 For example, if you earned €120,000 in the tax year, you will pay 36.93% on the amount of €73,031, and 49.50% on the difference between €120,000 and €73,031, or €46,969.
In the context of the high income taxes paid in the Netherlands, it is worth mentioning that taxpayers in this country have quite a few opportunities to deduct expenses from income, as well as to take advantage of numerous tax breaks. This makes it possible to clearly reduce the amount of advance payments paid to raise the amount of tax refunds from the Netherlands.
What taxes in the Netherlands will you still have to pay?
Tax for work in the Netherlands is not everything - deciding to live in the country, you must also reckon with the need to pay other tributes. Don't forget about BTW, the equivalent of VAT. It will be paid by all entrepreneurs earning income from the sale of goods and the provision of services.
Drivers don't have it easy either - if you're going to move around the Netherlands by car, you're in for a surprise in the form of road taxes BPM (belasting van personenauto's en motorrijwielen) and MRB (motorrijtuigenbelasting). They apply to every car user using Dutch roads.
Amount of tax in the Netherlands - relief for special employees 30% tax rulling
The Netherlands is suffering from a shortage of specialists in certain industries. To encourage foreigners to work in the Netherlands, the so-called concept of special employees was introduced. It applies to professions on a list prepared by the Ministry of Labor and Finance. When taking up a job in the Netherlands in such an occupation, one can catch a special relief. It is called 30 tax rulling and it consists in the fact that for a period of 5 years only 70% of the salary will be taxed. The remaining 30% will not be taxed and will remain entirely in the employee's pocket - in other words, a tax-free amount. This is supposed to be an incentive for professionals to come to the Netherlands and work in the country in their chosen professions.
You already know what the tax in the Netherlands is, and what reliefs you can use to reduce it. If you're looking for help filing your annual return, we know the best way to do it. Use our Aangifte24 app and get all the paperwork done quickly and conveniently - welcome.