The Dutch Tax System explained

Expat Guide to the Dutch Housing Market

Everyone living in the Netherlands is required to pay taxes. The Belastingdienst, the Dutch Tax Office, collects different types of taxes. A short guide to Dutch taxes!

Taxes are complicated. Rules change, to each individual case special rules apply. Be sure to get well informed on the requirements specific to your case. Visit the website of the Belastingdienst for general tax information, or the I am Expat website for tax guides for expats and a list of expat-friendly tax advisors. We’ve collected need to know tax information for expats:

Income tax

Earning money whilst living in the Netherlands, you’ll need to pay tax on your income. Once a year you are required to file your annual tax return. This can be done online, or with help from a tax advisor.

Your employer withholds income tax from your monthly salary, the so-called wage tax. Are you self-employed? Then you must calculate and declare your income tax via the annual tax return.

Payroll tax

The wage tax withheld by your employer is also known as payroll tax. In addition, payroll tax also includes national insurance contributions for pensions, unemployment allowances and other Dutch benefits and allowances.

The deduction of payroll tax is important to take into account whilst discussing salary and secondary employment contract terms. Usually a gross salary (bruto salaris) is agreed upon, which includes these taxes. Usually there is a large difference between this gross salary and the net salary (netto salaris) that results after deduction.

VAT sales tax

Besides income and payroll tax, the Tax Office also collects taxes through omzetbelasting: revenue tax. In Dutch this is known as BTW. Apart from certain foundations and associations, all businesses add BTW to the prices of their goods or services. Depending on the type of service, either 9% of 21% BTW is added.

Businesses declare their BTW earned and spent via the quarterly sales tax declaration to the Tax Office.

Annual tax return

Every year between March 1st and April 30th you are required to file your annual tax return. Read more about this right here.

General & Labour Tax credits

There are two types of tax credit: general tax credit to which every taxpayer is entitled and labour tax credit to which every working person is entitled. You receive both of these credits automatically as they are calculated and credited by your employer on your salary.

The value of the tax credits depend on your income, decreasing as your income increases. When self-employed, your tax credits are calculated while filing your annual tax return.

The 30% ruling

Highly skilled employees from abroad who come to work in the Netherlands may be granted a tax advantage. This advantage consists of having to pay taxes over only 70% of your income, instead of 100%. Read more about the 30% ruling here on the website of the Belastingdienst.

More on the 30% ruling

Local municipality tax

As a property-owner you will have to pay your local municipality (gemeente) taxes related to your property. Think of:

• WOZ-value: property tax on real estate. Your local municipality will make an estimate of the value of your house, based on similar properties recently sold.
• Garbage collection taxes.
• Sewage rates.

Other taxes from your local municipality you might come across: parking permits, tourist taxes and taxes for mobile properties such as houseboats and caravans. Read more about the tasks and responsibilities of municipalities here.

Transfer tax

When buying a house or apartment, you’re required to pay transfer tax. Currently, this tax rate amounts to 2% of the property value if you buy the house to live there yourself. Read more about taxes, costs and fees related to buying a house here.

Motor vehicle tax

When a vehicle is put under your name, after you’ve bought or imported it, you’re required to pay motor vehicle tax monthly. The weight, type of fuel and type of vehicle, i.e. car, van, motorcycle, constitute the rate of the tax.

More types of tax

Other taxations you’ll come across in the Netherlands are:

• import tax: whenever you import or receive goods from outside the Netherlands, you’re required to pay import duties and BTW. Rate depends on whether you’ve imported the goods for your business or for your personal use and of course, the value of these goods.
• inheritance tax: if you receive an inheritance from someone deceased whose properties and financial affairs were Dutch, you’ll have to pay tax over these amounts.
• gift tax: if a resident of the Netherlands grants you a property or amount of money, you’ll have to pay tax on the value of what has been gifted.
• corporate tax: companies established in the Netherlands or companies outside the Netherlands receiving income from the Netherlands are required to pay taxes over these incomes.
• gambling tax: you’re required to pay tax on winnings above a certain amount won in games of chance.

Taxes are just as complicated as they’re important. So if you need help, contact a Dutch tax officer. Find an overview of expat-friendly tax services on this website.

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