Taxation in Holland
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Taxation In The Netherlands
Personal Income Tax
Dutch residents are taxed on their worldwide income, whereas non-residents are taxed on specific Dutch income only. The place of residence of an individual is determined by the facts and circumstances.
Income Tax Rates Netherlands
For the year 2020, the Dutch personal income tax rate is maximized at 49.5%. This rate applies to income exceeding € 68,508. Up to € 20,384 the income is taxed at 9% (first bracket), between € 20,385 to € 34,300 at 10.45% (second bracket) and between € 34,301 to € 68,507 at 38.1% (third bracket). €68,508 + is 51.75%
The percentages of the first two brackets are including Dutch social security contributions for Old-Age Pension (AOW), General Survivors’ Pension Act (Anw) and Health Insurance Contribution Act. Individuals working in the Netherlands generally have social security coverage and must therefore pay social security contributions. An exception to this may, for example, apply in the event of secondment.
Special Tax facility for Expats
Expats working in the Netherlands can make use of the so-called “30% ruling” essentially getting 30% of their wage tax free (strictly speaking, an untaxed reimbursement of extra-territorial costs). In order to apply for this facility the expat must fulfill certain requirements.
Filing a Dutch Personal Income Tax Return
Dutch personal income tax returns must be filed in the Netherlands within 3 months after a calendar year (an extension can be requested). For the year in which you moved to or from the Netherlands. Netherlands, you will receive from the Dutch tax authorities an invitation to file a M-form which is only in Dutch available. Our experience is that in virtually all cases the Dutch M-form results in a tax refund. In the Netherlands the tax year is from 1 January up to and including 31 December.
Payroll taxes can be interpreted as a prepayment of personal income tax and therefore has to be deducted from the income tax due. The same rules apply regarding the calculation of the amount due.
Payroll Tax Return
Payroll tax returns has to be filed by the employer before the last day of the next month following the tax period (usually a month), including the payment.
Corporate Income Tax
The Dutch corporate income tax generally applies to Dutch resident companies (legal entities) on their worldwide income and to non-resident companies on their income with a Dutch source. Special regimes apply for instance to income from participations (fully exempt) and from innovation.
Corporate Tax Rates 2020
Taxable profit up to € 200.000 is taxed at a rate of 16.5%. Amounts above € 200.000 are taxed at a rate of 25%. In the coming years the lower tax bracket will increase up to € 350.000.
Filing a Corporate Income Tax Return
Within 5 months after end of financial year the corresponding income tax return has to be filed.
VAT is charged on goods and services as a percentage of the price and is paid by the purchaser to the supplier given the supplier qualifies as taxable person for VAT purposes. The supplier has to take care of paying the VAT to the tax authorities. In essence it’s a tax on the added value of taxable persons by taxing the output while allowing a deduction of the VAT charged on the input (input VAT). Thereby, effectively taxing the end user. A person performing business activities in the Netherlands is considered a taxable person for VAT purposes. This can be a legal entity or a natural person, resident or non-resident. In addition, VAT is due on imported goods into the Netherlands regardless of whether the importer is a taxable person or not.
The standard VAT rate is 21%. In addition there is a lower rate for certain goods and services at 6% and a 0% for exported goods and services.
Other Dutch Taxes
- Payroll taxes
- Dividend withholding tax
- Customs and Excise
Note that the Netherlands does not levy a withholding tax on interest and royalties.
Organisations that can assist with Taxation
MFFA Tax Advice is a Dutch based tax and accounting boutique (one stop shop) with offices in Amsterdam, Amstelveen and Eindhoven. We provide forward-thinking and tailored Dutch tax advice for individuals and foreign companies operating cross border.