Expat Income Tax Guide
Income tax in the Netherlands can make some expats’ heads spin. Without question the system is overly complicated and the rates for even low earners are particularly severe. In defense of the system, however, the taxes seem to go to the right places and most public facilities and services are of a high standard. Income tax is paid by your employer per pay check based on your earnings. The more you earn the more you pay:
- 37% on the first €19,645
- 42% from €19,645 – €55,991
- 52% on anything above this
Everyone who is a resident in the Netherlands for more than six months is required to pay income tax. It is your employer’s responsibility to pay your income tax on your behalf.
For taxpayers aged 65 or older (to be referred to as 65+) reduced rates apply for the first two brackets: 15.75% and 23.5%, respectively.
That said, all tax payers are required to file a tax return before April 1st every year. Employers will provide an overview of payments made during the fiscal year. The fiscal year is equivalent to the calendar year. Several weeks before the deadline – usually about two months – you will receive a request to file a tax return from the tax office (belastingdienst) along with the appropriate form for your circumstances. If you do not receive this form, it is possible that you are not required to file a return (if for example you were not working in the Netherlands for the entire year you may be exempt) but it would be wise to contact the tax authority to confirm.
BELASTINGDIENST (Tax Authority)
If you do not receive the form for any other reason you can download it from the website above, or call them to request one. You can either return the form by mail to your local belastingdient office (see their website for your closest office) or fill it out electronically and submit it online (see their website for details).
Deductions are possible in the following instances:
- Charitable donations – organizations such as churches, cultural foundations, scientific research institutions, based in the Netherlands are generally deductible once the donation was in excess of 1% of your income.
- Travel deduction – If you travel to work using public transport you should be entitled to a partial deduction on this basis.
- Pension gap – If you are not involved in a pension scheme then a deduction may be possible to cover this ‘pension gap’.
- Property – If you own your own property in the Netherlands a deduction may be possible.
- Education costs – materials and admission/ registration fees associated with full time study.
Further deductions can be made for people with disabilities, elderly people and parents.
The Netherlands has taxation treaties in place with a lot of countries to avoid double taxation. This means that as long as you are paying taxes on your income in the Netherlands you will not be required to pay taxes in your country of origin. Treaties exist with the following countries among others:
- New Zealand
- South Africa
- All EU member states
Expatica have a particularly helpful section on their website to guide you through the tax labyrinth
Expat Tax can help guide you through the process and will even do the return for you for a fee