Tax In Netherlands

A Contractor's Guide to Taxes : 

One of the most consistently challenging aspects of contracting in the Netherlands is complying with the country’s tax system. As well as paying tax in Netherlands, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge. 

How do I calculate my taxable income: 

If you’re working in the Netherlands under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in the Netherlands for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in the Netherlands, but contractors may not be offered this service because of their short stay with each employer.

Anybody who can’t pay their tax in the Netherlands through PAYE is left with the prospect of doing everything themselves.

Do you know much about Tax Law in the Netherlands? Do the Netherlands have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in the Netherlands can range from 8.9 to 52 percent (not inclusive of the 27.65% national insurance tax that is levied on certain income tax brackets), and you need to be sure you are placed in the correct tax brackets.

Tax Calculator: 

If you are a contractor and want a calculation on your tax and net retention in the Netherlands, we can supply it to you free of charge. 

Using an Umbrella Company for Income Tax : 

Contractors in the Netherlands are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A Dutch umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).

The companies are experts in Dutch taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Dutch tax office or tax department directly including processing your tax refund if you are eligible.

How We Can Help You with Tax: 

We work with numerous umbrella companies in the Netherlands, many of whom are experts in tax and immigration laws. If you have any questions about tax in the Netherlands, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Dutch work permit.

Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in the Netherlands but without the overhead of directly dealing with the Dutch tax authorities. Get in touch with us today for some reliable advice on tax in the Netherlands!

 

When Do You Need to Lodge Your Tax Return?: 
The tax-year ends on December 31.
Tax Filing Deadline : 
May 1 for residents and July 1 for non-residents
Can you file it online? : 
Yes, https://mijn.belastingdienst.nl/mbd-pmb/
Currency: 
Euros (EUR)
Tax-free Threshold in: 
None
Grossed Income: 
Up to 19,982*
Tax Rate: 
8.90%
Grossed Income: 
Between 19,983 and 33,791*
Tax Rate: 
13.15%
Grossed Income: 
Between 33,792 and 67,072
Tax Rate: 
40.80%
Grossed Income: 
Above 67,072
Tax Rate: 
52%
How long does it take to set up: 
4 days
How much does it cost: 
EUR 1800
Is it easy? : 
Starting a Business Rank: 20. High ranking means that setting up a limited company in Netherland is easy.
How to File Taxes in: 

Every resident or non-resident taxpayer is legally required to register for tax purposes with the Dutch tax office. In the Netherlands, payroll tax is withheld from your salary each month under a Pay-As-You-Earn (PAYE) System.

Step 1: Register for a DigiD here.

  • Note: A DigiD may take a few weeks to arrange.

Step 2: The tax authority (Belastingdienst) will send you a digital invitation through Mijin.overheid.nl to file a tax return. If you do not get one, but you received income that hasn’t been taxed or you have deductions, you must still file a form online.

Step 3: Collect the necessary documentation. This may include:

  • Year-end statement from employer
  • Year-end statements from the bank including a mortgage statement).

Step 4: Download the electronic software program required to submit your tax return from the website, www.belastingdienst.nl.

Step 5: File the relevant form (all forms are filed electronically except for the M form).

  • P form: those who are in a regular employment situation and have resided in the Netherlands for the entire fiscal year.
  • M form: those who have resided in the Netherlands for part of a year.
  • C form: those not residing in the Netherlands, but earn Dutch income.

Step 6: Within 6-12 weeks of submitting your tax return, you will receive a preliminary assessment from the tax authorities detailing an estimated tax return. An M and C form may take longer.

Step 7: A few weeks later, a final tax assessment will be issued, detailing the exact tax payment or refund. 

Notes: 

In the Netherlands, income tax is divided into 3 categories (boxes) of income. Each box has its own tax rate and an individual’s taxable income is based on the aggregate income across all 3 boxes.

Box 1: Taxable income from work and home ownership. Includes:

  • Employment income.
  • Home ownership of a principal residence (deemed income).
  • Periodic receipts and payments.
  • Benefits relating to income provisions.

Box 2: Taxable income from a substantial interest (flat rate of 25%)

Box 3: Taxable income from savings and investment (flat rate of 30%)

The above table is for the income tax rate for box 1.

*Note: in the first and second tax brackets, national insurance tax is levied at a rate of 27.65

Does the 183 day rule apply in: 

No

When do you become a tax resident in: 

An individual’s residence is determined based on facts and circumstances. These can include:

  • Where a permanent home is maintained.
  • Where employment duties are performed.
  • Where the individual's family resides.
  • Where the individual is registered with the local authorities.
  • The individual’s centre of economic interests.
  • The intended length of stay.

The tax courts judge whether an individual has durable ties of a personal nature with the Netherlands. Ties of a personal nature exclude pure business considerations, factors like the maintenance of an abode have a more defining role. 

Am I taxed on my global income in: 

Yes, if you are resident. Non-residents are subject to tax on Netherland-specific income

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