Living in the Netherlands means being subject to various taxes collected by the Belastingdienst. To navigate through the complexities, here's a concise guide to Dutch taxes:
If you earn income while residing in the Netherlands, you are required to pay income tax. Each year, you must file an annual tax return, which can be done online or with the assistance of a tax advisor. For employees, income tax is withheld from their monthly salary as wage tax, while self-employed individuals must calculate and declare their income tax through the annual tax return.
Payroll tax is the wage tax withheld by employers, including national insurance contributions for pensions, unemployment allowances, and other Dutch benefits. When discussing salary and employment contract terms, it's essential to consider the deduction of payroll tax, as it affects the net salary received after deductions from the gross salary.
Apart from income and payroll tax, the Tax Office collects revenue tax through the Value Added Tax (VAT), known as BTW in Dutch. Most businesses add BTW to the prices of their goods or services, with either a 9% or 21% rate depending on the type of service. Businesses declare their earned and spent BTW via quarterly sales tax declarations to the Tax Office.
Between March 1st and April 30th each year, individuals are required to file their annual tax return, reporting their income and relevant deductions.
Taxpayers receive two types of tax credits: the general tax credit and the labour tax credit. Both credits are automatically calculated and credited by employers based on income levels. For self-employed individuals, tax credits are calculated when filing the annual tax return.
Highly skilled employees coming to work in the Netherlands may be eligible for the 30% ruling, which allows them to be taxed on only 70% of their income instead of the full amount. This tax advantage is subject to specific criteria and regulations.
Property owners are required to pay local municipality taxes related to their properties, such as property tax based on the estimated value of the house, garbage collection taxes, and sewage rates. Other taxes from municipalities may include parking permits, tourist taxes, and taxes for mobile properties like houseboats and caravans.
When purchasing a house or apartment, buyers are obliged to pay transfer tax, which currently amounts to 2% of the property value if the property is intended for personal residence.
After purchasing or importing a vehicle, owners are required to pay monthly motor vehicle tax, with the rate determined by factors like the vehicle's weight, type of fuel, and vehicle type (car, van, motorcycle).
Various other taxes exist in the Netherlands, including import tax, inheritance tax, gift tax, corporate tax, and gambling tax, each with specific requirements and rates.