The
Dutch workforce is made of a large percentage of foreign employees, mostly from other EU countries, however, non-EU residents also find it quite appealing to work here. Partially, expats choose to work in the Netherlands thanks to the taxation system which is quite unique in Europe when it comes to the benefits provided to foreign employees.
The
expat tax in the Netherlands is thoroughly explained in the article below. Also, if you are interested in
opening a company in the Netherlands, our specialist in company formation are at your service.
How are foreign citizens taxed in the Netherlands?
When it comes to the Netherlands and the tax rates of foreigners, these are not different from those applies to Dutch citizens and permanent residents, however, there are several aspects related to benefits for foreign citizens.
An important thing to consider when paying taxes as a foreign citizen in the Netherlands or any other country is related to double taxation. In the case of the Netherlands, foreigners are required to file income statements here and in their home countries.
One of the most important aspects to consider about the expat tax in the Netherlands is that it is based on the Box system.
Expat incomes subject to taxation in the Netherlands
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income obtained through employment, which is based on a gross and net amount,
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the payroll tax which derives from the salary of foreign employees,
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various contributions for pension, healthcare and unemployment,
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income from investments and real estate ownership,
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other taxes related to owning various assets in the Netherlands.
The most important thing to consider about the
Netherlands and the
tax rates for foreigners is that there is a special provision called th3
30% tax ruling under which foreign employees are exempt from paying 30% of their salary taxes. However, there are several conditions to be met. These are:
You can rely on us for accounting services and obtain most of the benefits applicable to expats paying taxes in the Netherlands.
The expat tax in the Netherlands and the Box system
Taxation in the Netherlands is the same for local and foreign citizens in the sense that they need to file their tax returns in accordance with the Box system.
The system uses 3 boxes corresponding to income from employment and real estate ownership (Box 1), interests and income obtained from ownership in companies (Box 2), savings (Box 3). A foreigner must check the box related to the types of income obtained (they can check one, two, or all boxes, if necessary).
Based on the boxes checked,
the Netherlands tax rates for foreigners are computed, however, at the same time, they are also provided with information about the
deductions and reductions they can benefit from. These are also known as tax allowances, and in this country, expats can benefit from:
In order to benefit from all these allowances, a foreign citizen is required to register with the
Dutch tax authorities.
For information how to register with the authorities in the Netherlands, you can obtain information from our company registration advisors.
Tax rates for foreigners in the Netherlands
In the
Netherlands, the
tax rates for foreigners are the same as for Dutch citizens and permanent residents and imply the following:
-
- the income tax is levied progressively and starts at 8.90%*,
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- the maximum rate is set at 51.75*,
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- under the Box 2 income, the rate is 25%,
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- under the Box 3, the income rate is 30%.
*The rates expressed above are available for 2020 and are subject to slight changes on a yearly basis due to the variations of employment incomes.
Also, it should be noted that starting with 2019, the 30% ruling will be available for 5 years. For 2020 and 2021 a transitional arrangement is in place.
If you need information about the
expat tax in the Netherlands, you can rely on our specialists who can help you calculate it. You can also request our
company registration services in the Netherlands, so do not hesitate to
contact us.
