Taxes in the Netherlands

Written by Lais Cattassini Moderated by Oleksandra Dosii

Lais Cattassini

Lais is a Brazilian journalist and copywriter with over 17 years of experience, writing about things she knows really well (travelling, cinema, social media trends) and things she loves learning about.

Oleksandra Dosii

Oleksandra is a dedicated marketer with a passion for growing HR-tech products. She believes content marketing is about delivering high-quality content that provides value—not just generating leads. Since 2016, Oleksandra has been involved in tech talent relocation.

Last update: August 29, 2024

Next update: Scheduled for February 1, 2025

In the Netherlands, the tax system divides taxable income into three categories, also known as "boxes". 

Box 1 is taxes on income from work and home, which includes salaries, freelance income, benefits and home ownership costs. The higher the earnings, the higher the taxes.

Box 2 refers to tax on substantial interests. If you own at least 5% of shares or options in a company, you pay 25% tax from substantial interests.

Box 3 is taxes on income from savings and investments. This covers income generated from real estate (excluding the taxpayer's primary residence), shares and savings. According to the Dutch government, it is 30% of the value of all assets minus any debts.

What is the income tax in the Netherlands?

The income tax system in the Netherlands is progressive, meaning that the tax rate increases with higher income levels.

For 2025, the rates will be as follows:

Married individuals or people in a registered partnership divide certain income and deductible items on their tax return. According to the Dutch government, these people are considered tax partners.

Throughout the year, income tax contributions will be deducted from your monthly salary as an advance payment of the final income tax. Once you file your annual tax return, which we explain further down this article, you will discover whether you still owe additional taxes or are entitled to a refund.

Social Security contributions

Social security contributions are obligations for both employees and employers in the Netherlands. These contributions fund various social security benefits, such as pensions, unemployment benefits, and health insurance.

The National Insurance Contributions (Volksverzekeringen), covers old-age pensions (AOW), survivor benefits (ANW), and long-term care (WLZ). For 2024, the combined contribution rate for employees is 27.65% of gross income up to a maximum income of €37,149. The Employee Insurance Schemes (Werknemersverzekeringen), cover unemployment insurance (WW), sickness benefits (ZW), and disability insurance (WIA) and are usually paid by the employer.

Employers pay for Unemployment Insurance (WW), Sickness and Disability Insurance (ZW, WIA) and the Health Insurance Act (ZVW).

If you work in the Netherlands, you are automatically covered under the Dutch social security system. In some cases, expats may be exempt from Dutch social security contributions if they continue to pay into their home country's social security system under a bilateral agreement or an EU regulation.

Personal allowances

Personal allowances are costs that can be deducted from taxable income, such as medical expenses, education costs and donations to charities.

Even expats can benefit from allowances and deductions, including interest paid on mortgages, allowance to help cover mandatory health insurance costs and support with childcare expenses. According to the Dutch government, you are allowed to use 1.92% of your taxable salary – up to €400,000 – on tax-free allowances and benefits.

Online tax calculator for Dutch taxes

Online calculators can help individuals estimate their income tax liability and net income after tax payments.

Even though the Dutch tax authority (Belastingdienst) provides relevant information on taxes, it does not offer a calculator for Dutch taxes. You can calculate your net income here.

Annual tax returns in the Netherlands

In the Netherlands, people are required to file their tax returns annually to the Dutch Tax and Customs Administration (Belastingdienst). The process is fairly straightforward but can vary depending on residency status and income sources.

If you live in the Netherlands or spend more than 183 days within a year in Holland, you are considered a resident for tax purposes and are taxed on your worldwide income. If you do not meet the residency criteria, you are considered a non-resident taxpayer and are only taxed on Dutch-sourced income.

To file tax returns, citizens and residents will need to provide their Annual Salary Statements (Jaaropgave), bank statements, mortgage information, investment statements, any benefits or allowances received, and their previous year's tax return if applicable.

The Dutch tax year runs from January 1 to December 31, and the deadline for filing tax returns is usually May 1 of the following year.

The Dutch Tax Authority often provides a pre-filled tax return with information they already have, such as salary, mortgage interest, and other data. Any changes in income or investments must be reported. After submitting your tax return, you will receive a tax assessment (aanslag) from the Belastingdienst. This assessment will state whether you owe additional taxes or are entitled to a refund.

If you owe taxes, you must pay the amount stated in the assessment by the due date mentioned. Payments can be made online through various methods. If you are entitled to a refund, the amount will be deposited directly into your bank account. Refunds are typically processed within a few months after filing.

For those with more complex tax situations, especially expats with international income, it may be beneficial to consult a tax advisor or accountant. These services ensure you pay correctly and can help collect benefits, allowances, and deductions. For expats, services like these can be even more beneficial, as they help foreigners overcome language barriers and the complicated tax regulations of a new country.

How to pay less taxes

Discussing tax payments with a tax advisor or accountant can be extremely beneficial for taxpayers wanting to reduce the amount they pay to the Dutch tax system.

The Dutch tax system offers several deductions and allowances that can help lower taxable income, reducing the overall tax liability. Homeowners can deduct mortgage interest payments on their primary residence from their taxable income in Box 1. Certain healthcare expenses not covered by insurance, such as long-term care or specific treatments, can also be deductible if they exceed a certain threshold based on income.

Expats who meet specific criteria can benefit from the 30% ruling, a tax advantage that allows up to 30% of their gross salary to be paid tax-free. To qualify, expats must be recruited from abroad, meet specific skill requirements, and have not lived within a certain distance from the Dutch border for the past 16 of the 24 months before starting their work in the Netherlands. There is also a salary threshold for this type of benefit. As of 2024, the maximum untaxed compensation is €69,900 if your salary is €233,000 or higher.

All taxpayers in the Netherlands are entitled to a general tax credit, which reduces the amount of income tax owed. The amount varies depending on the income level, with lower incomes receiving a higher credit.

Other Dutch taxes

Other than income taxes, Dutch citizens and residents will come across other taxes on consumption, property, and financial activities.

Value added tax or VAT (Belasting toegevoegde waarde or BTW)

VAT is a consumption tax levied on most goods and services. Businesses collect VAT on behalf of the government. They are based on the European Union's VAT Directive, which determines that the tax must be 15% or higher.

In the Netherlands, the standard VAT rate is 21%, according to the Dutch government. However, some goods and services, such as education, health care, childcare, insurance, and banking services, are exempt.

Municipal taxes (Gemeentelijke belastingen)

Municipalities impose local taxes to fund services such as waste collection, public amenities, and infrastructure.

People living in the Netherlands might be required to pay property taxes, waste collection taxes, sewerage charges, and water board taxes. The rate depends on the municipality. Generally:

• Property tax (Onroerendezaakbelasting or OZB): The average rate for residential properties is typically around 0.1% to 0.3% of the property's assessed value. For example, this could amount to roughly €250 to €750 per year for a property valued at €250,000.
• Waste collection tax (Afvalstoffenheffing): Ranges from €150 to €300 annually, depending on the municipality and the size of the household​.
• Sewerage charges (Rioolheffing): Typically fall between €100 and €250 per year.
• Water board tax (Waterschapsbelasting): Generally between €200 and €400 per year.

Transfer tax (Overdrachtsbelasting)

Transfer tax is levied on the transfer of property ownership, such as when buying a house or commercial property. For residential properties, the tax rate is 2% of the price. Other properties, such as commercial real estate, might have a tax rate of 6%.

Gift and inheritance tax (Schenk- en erfbelasting)

Gift and inheritance tax is levied on the value of assets transferred as gifts or inherited. Rates range from 10% to 40% depending on the relationship between the giver and receiver and the value received.

Motor vehicle taxes

Motor vehicle taxes are levied on vehicle ownership and usage. Road tax (Motorrijtuigenbelasting) is based on the weight and type of vehicle and its CO2 emissions. The vehicle registration tax (Belasting van Personenauto's en Motorrijwielen - BPM) is a one-time tax based on the vehicle's CO2 emissions and value, paid when a car is first registered in the Netherlands.

Tax treaties with the Netherlands

The Netherlands has a comprehensive network of tax treaties with many countries worldwide to avoid double taxation and prevent tax evasion.

There are two pages on the Dutch government's list of countries with treaties with the Netherlands. If you live in the Netherlands and receive income from a different country, you can check Verdragsstaten ingezetenen. If you do not live in the Netherlands, but receive payments from a Dutch company, the page Verdragsstaten niet-ingezetenen lists countries with treaties with the Netherlands.