The Dutch tax system is relatively complex, with a variety of different taxes that individuals and businesses may be subject to. In this article, we will provide an overview of the Dutch tax system, including who is taxed, the tax brackets and rates, income tax, payroll tax, the 30% ruling, and entrepreneur tax.
Who is Taxed
In the Netherlands, residents and non-residents are subject to Dutch income tax. Resident individuals are taxed on their worldwide income, while non-residents are only taxed on their Dutch-sourced income. An individual is considered a resident for tax purposes if they have a permanent home in the Netherlands or if they stay in the Netherlands for more than 183 days in a calendar year.
Tax Brackets and Rates
The Dutch income tax system has several tax brackets, with different rates applied to each bracket. The tax brackets for 2022 are as follows:
|Payroll taxes contribution
|Up to state pension age
|State pension age and older,
born in 1946 or later
|up to and including € 35,472
|€ 35,473 - € 69,398
|€ 69,399 or more
Payroll Contributions Belastingdienst.nl
In addition to the above income tax rates, there is also a national insurance contribution (premie volksverzekeringen, PVV) that is calculated based on the income tax.
Income tax in the Netherlands is calculated on the basis of an individual’s taxable income. Taxable income includes all income from employment, self-employment, investments, and rental properties. Certain deductions and allowances, such as the mortgage interest deduction and the work-related expense allowance, may be available to reduce an individual’s taxable income.
In addition to income tax, employees in the Netherlands are subject to payroll tax (loonbelasting), which is withheld by the employer and paid to the Dutch tax authorities. The payroll tax rate varies depending on the employee’s income and the length of their employment contract.
The 30% ruling is a tax advantage for highly skilled expats who come to work in the Netherlands. Under the 30% ruling, a portion of an expat’s salary (up to a maximum of 30%) is considered a tax-free allowance for extraterritorial expenses. This means that the portion of the salary covered by the 30% ruling is not subject to Dutch income tax or national insurance contributions. To qualify for the 30% ruling, the individual must be employed in a specific high-skilled position and meet certain salary and other criteria.
Entrepreneurs in the Netherlands are subject to income tax on their business income. They can file their income tax return (aangifte inkomstenbelasting) online or through a tax advisor. In addition, they can apply for a VAT refund (BTW teruggaaf) if they have paid more VAT than they have charged to their customers. This can be claimed on a quarterly or annual basis.
In conclusion, the Dutch tax system is relatively complex with various taxes and rules to be aware of. If you are an expat or entrepreneur in the Netherlands, it is important to understand your tax obligations and take advantage of any tax breaks that may be available to you. It is recommended to consult a tax advisor or accountant to ensure compliance and optimize your tax position.