Learn more about how the tax system works in the Netherlands, and in particular the annual Dutch income tax return.
Annual income tax return (aangifte inkomstenbelasting)
Everyone who lives in the Netherlands and receives income, pays tax in principle. Whether as an expat (working in the Haarlem region) or Dutch national, if you earn money whilst living in the Netherlands, you are required to to file a Dutch income tax return and pay taxes.
If you live in the Netherlands, you qualify as a resident taxpayer. If you live abroad and receive income from the Netherlands that is taxable in the Netherlands, you qualify as a non-resident taxpayer. In both cases, you will be subject to Dutch income tax.
How do I pay tax?
If you are employed by a company then a percentage of your monthly salary is automatically deducted by your employer. This wage tax (loonbelasting) is contained within the payroll tax (loonheffing).
If you are self-employed in the Netherlandsthen you must calculate and pay your income tax including your BTW tax via the annual tax return.
Do I need to do a Dutch tax return?
Even though wage tax has already been deducted from your gross salary as an advance levy or payment on your income tax, you often still need to complete an annual income tax return. The Dutch tax office will inform you if you are required to fill your income tax return. In January, you will receive a letter (aangiftebrief) from the Belastingdienst asking you to complete a tax return for the previous year. If your financial affairs are simple and do not include any of the above elements then you may not receive a letter and you may not need to submit an annual tax return. Be warned: If you have not received a form from the Belastingdienst, this does not indicate that you are free of tax obligations. You can always visit a Belastingdienst branch office or call the BelastingTelefoon on 0800 0543 to find out if you need to complete an income tax return and/or to request the letter.
Please, note that if you received income which hasn’t been taxed, you are legally obliged to request a form and file a tax return.
Why do I need to complete Dutch tax return?
The income tax return is necessary to balance out your prepaid wage tax with other financial aspects such as:
- A mortgage.
- Additional income, savings or investments.
- Your partner’s income.
Tax deductions such as studies, childcare or healthcare costs.
What is the deadline for the Dutch tax return?
In the Netherlands, the fiscal year runs from 1 January to 31 December.
The time frame for submitting income tax returns is from 1 March until 30 April. It is possible to request a further extension, but this must occur before the deadline. You can request an extension by contacting the Belastingdienst directly or byasking a Dutch tax advisor to make the request.
How to I file my taxes?
You can file your taxes digitally via the Belastingdienst website. However, the program is only available in Dutch and you will first need to apply for a DigiD. The other option is to enlist the help of a tax accountant or advisor. Many English-speaking advisers who specialise in expat and international tax issues have offices in Amsterdam or Haarlem. Please do know that if you do not already have a DigiD account, it can take a few weeks to arrange this, so don’t leave it until the last minute.
How much do tax I have to pay?
The amount of tax you pay depends on your level of income. Higher earners can expect substantial taxation on their salary (up to 49.5%). However, your personal situation, type of work, residency status, and other assets and earnings (particularly from abroad) will affect your position considerably.
In the Netherlands, income sources are subdivided into 3 categories. These 3 categories are called boxes. Because of this classification, the Dutch tax system is called the box system. The amount of the tax rate depends on the source of income, the amount of income (taking into account any deductions). The total amount of income tax consists of the balance of the 3 boxes.
Which boxes does the box system consist of?
As described above, the Dutch income tax system is divided into 3 boxes. We will briefly discuss these boxes below. If you click on the links, you will receive a detailed explanation per box.
Box 1: taxable income from work and home
In box 1, the income from work (wages, business, benefits, other activities) and owner-occupied home (owner-occupied home lump sum) are added together. The deductible items may be deducted from this amount (such as mortgage interest and expenses for income provisions). Income tax is due on the balance, the higher the rate becomes, the higher the balance.
Box 2: taxable income from a substantial interest
In box 2 the income from a substantial interest is taxed. A substantial interest exists if a taxpayer (whether or not together with his or her partner) holds at least 5% of the shares in a company. This also includes indirect share ownership. The income from a substantial interest can, for example, consist of dividend and profit from the sale of shares. Any costs may be deducted from this amount. Income tax is due on the balance.
Box 3: taxable income from savings and investments
In box 3, income from savings and investments is taxed. A taxpayer must calculate the balance of assets and liabilities on 1 January of a year. The taxpayer must pay capital tax on the balance as soon as the amount exceeds a certain basic amount.
Tax partners in the Netherlands
The Belastingdienst registers if you have a tax partner (fiscaal partner). Most commonly your tax partner is the person you are married to, have a registered partnership with, or live together with in a relationship.
After submitting a tax return, you will receive a preliminary assessment from the tax authorities. The preliminary assessment takes between 6 to 12 weeks after the return has been submitted. In the case of an M form, it can take up to 24 weeks before the assessment is made. The preliminary assessment is simply an estimation. Once tax authorities have checked the return, you will receive a final assessment along with payment or refund details.
Certain non-resident expat employees in the Netherlands can also apply to be treated as residents for tax purposes in order to gain access to Dutch deductible items. The most significant benefit is that the taxable amount of your gross Dutch salary is reduced from 100% to 70%. So 30% of the wage is tax-free. Visit the 30% ruling page for more information.
Want to Find Out More?
More extensive information on income tax can be found on the website of the Tax Authorities (Belastingdienst).
Tax advisors in the Netherlands
Whatever your individual circumstances in the Netherlands, if you need help with your Dutch taxes, it’s a good idea to consult some professionals, so take a look at our list of Dutch tax advisors in the Netherlands.