Taxation system
The Government of the Netherlands welcomes highly skilled migrants, researchers and professional artists from other countries. One of the ways they do this is to provide tax advantages for particular highly skilled newcomers, and create an advantageous tax climate for new businesses from outside the Netherlands and start-ups.
In the Netherlands the tax year runs from January to December. Tax returns are normally filled in during March or April. It is possible to request an extension until 1 September if necessary.
Income is divided into 3 ‘boxes’. Each category of income is assigned to a certain box, and different rates apply to each box:
- Box 1 werk en woning: includes a graduated tax on wages, profits, social security benefits, pensions and income as freelancer;
- Box 2 belastbaar inkomen uit aanmerkelijk belang: is a flat tax on income from substantial business interests;
- Box 3 belastbaar inkomen uit sparen en beleggen: is a flat tax on any savings and interest in the bank.
national health insuranceThe tax for wage and income is calculated through 4 progressive belastingschijven (tax brackets). The higher the income, the higher the tax bracket. The wage tax that is withheld from salaries is levied on the basis of the estimated annual salary, which is then calculated back to a monthly amount.
Also, the national health insurance contributions take up the biggest part of the first and second tax brackets. For those who have lived and worked in the Netherlands for only part of the year, they may be exempt from national insurance contributions for the full year or part of the year.
In most cases a tax declaration is completed online using a DigiD. A lot of details are already prefilled, depending on the information already held by the Belastingdienst (Tax and Customs Administration).
In some cases, a printed version of the tax declaration form is required to be completed:
- The applicant has lived in more than 2 countries in the last year;
- The form is being completed on behalf of a deceased person;
- The applicant has lived in the Netherlands for only part of the previous year;
- The applicant does not live in the Netherlands and does not have a DigiD, but is required to file a tax return as a resident taxpayer.
Knowing which form to complete for the Belastingdienst goes a long way to understanding the taxation system in the Netherlands:
- P form: For people who are classified as residents for taxation purposes, but do not live in the Netherlands, who have received an ‘invitation to file a tax return’ and do not make use of the online tax return for resident taxpayers.
- M form: For those who arrived in the Netherlands during the year and became a resident or for those who were resident and left the Netherlands during the year.
- C form: For non-resident taxpayers, who have received an ‘invitation to file a tax return’ and do not make use of the online tax return for non-resident taxpayers.
- Sometimes a statement of wereldinkomen (world income) is required, usually to check that the amount of toeslag (benefit) that has been paid is correct.
Everyone has to fill in the tax form as an individual. Please be aware that all tax forms are in Dutch. However, you can find English-language information on belastingdienst.nl.
The form may be filled in together with a tax partner, but they also have to (digitally) sign the tax form. The taxation allowances may be divided between tax partners to create the most financially advantageous situation.
When calling the Belastingdienst the automatic menu is in Dutch. The caller will be asked to type in their Burgerservicenummer – BSN (citizen service number) followed by the # key and choose from the menu of topics. If necessary just choose a number.
General tax credit
All employees are entitled to the algemene heffingskorting (general tax credit). This is a credit on taxation / social premiums, which is claimed as an allowance via the tax return. It is also possible to receive an allowance for a non-working partner, having lived together for a minimum of 6 months and the working partner has paid sufficient Dutch taxes. The amount of the credit depends on your age and whether you have lived in the Netherlands all year round.
The algemene heffingskorting (credit for non-working partners) is gradually being reduced and will stop in 2023.
Other governmental bodies who levy taxes
In addition to the central government, in the Maastricht region taxes are levied by;
- Provincie Limburg (the provincial government);
- Gemeente Maastricht, Gemeente Sittard-Geleen, Gemeente Heerlen (municipal government eg property tax, vehicle tax and dog licence fees), and
- Waterschap Limburg (water authorities eg water treatment and disposal of waste water).
For municipalities in the Maastricht Region all these are collected annually by the Belastingsamenwerking Gemeenten en Waterschappen Limburg – BsGW.
International aspects of Taxation
Individuals resident in the Netherlands are subject to income tax on their global income. This is known as resident tax liability. Measures have been taken to avoid double taxation whereby ingezeten belastingbetalers (resident taxpayers) would pay tax twice on all or part of their global income or profits. Treaties have been agreed between the Netherlands and many other countries, and there are general provisions for situations where a treaty has not been made with a specific country.
Conversely, persons who do not live in the Netherlands are also subject to income tax on their global income, which many include income from sources in the Netherlands. Such niet-ingezeten belastingbetalers (non-resident taxpayers) may opt to be treated as resident taxpayers. If so, they will be entitled to the deductions and rebates available to other resident taxpayers.
Non-resident individuals are subject to income tax in the Netherlands for the following types of income derived in a calendar year:
- taxable income from work and dwellings in the Netherlands (box 1);
- taxable income from a substantial interest in a company established in the Netherlands (box 2);
- taxable income from savings and investments in the Netherlands (box 3).
Individuals moving to the Netherlands for work may be entitled to the 30% Tax Facility, which allows for up to 30% of an employee's remuneration to be paid tax-free as an expense allowance, to cover double expenses and the extra costs of moving countries (temporarily). This allowance is valid for the first 5 years in the Netherlands. The 30% Tax Facility application must be completed by both employer and employee jointly. More information can be found on the Belastingdienst website.
For more specific queries about taxation in the Netherlands as a non-resident, or queries about the tax situation as a cross-border worker, contact:
- the Grensoverschrijdend Werken en Ondernemen – GWO office of the Belastingdienst
- the GrensInfoPunt Maastricht at Maastricht International Centre or
- the GrensInfoPunt Aachen-Eurode at Eurode