Apply for the General Tax Credit in the Netherlands

The Netherlands is a very attractive country from a taxation point of view for both companies and individuals. When it comes to individuals, both Dutch citizens and foreigners are entitled to various tax deductions or exemptions, depending on various factors, such as the income and marital status.

Taxation in the Netherlands is based on the box system. This means that taxpayers must fill out a form by checking the box or boxes which correspond to their tax situation. Based on these boxes, the general tax credit will be calculated.

Our local agents can explain how taxation occurs, but they can also help foreigners open a company in the Netherlands.

The general tax credit in the Netherlands

One of the most common tax credits available for locals and expats in the Netherlands is the general tax credit.

The Dutch general tax credit implies:

• -          calculating a taxpayer’s total income and applying all tax deductions;
• -          after the deductions are applied, the taxable income will result;
• -          the income tax rates will be then applied to the amount resulted;
• -          the general tax credit will be granted on the income tax applied.

The main difference between the tax deductions and the Dutch general tax credit is that the latter directly reduced the amount of the tax.

We offer accounting services for those who want to file their tax returns in the Netherlands.

How is the Dutch general tax credit granted?

There are two ways in which the Dutch tax authorities grant the tax credit. These ways depend on the taxpayer’s status:

• -          of an employee;
• -          of a retired person.

In the case of employees, the Dutch company will calculate the general tax credit, so the workers do not need to file any additional documents with the authorities. In the case of retired persons, this tax break will be credited directly by the state.

It should be noted that in the case of married persons, each spouse is entitled to receive his or her own general tax credit. There is also the possibility to benefit for the spouse earning less or with no income to have the tax credit paid by the authorities under certain conditions.

For more information on the general tax credit, please contact us. You can also rely on us if you are interested in company formation in the Netherlands.