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Expat Taxes in the Netherlands

Updated on Tuesday 01st December 2020

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Expat-taxes-in-the-NetherlandsThe 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?

 
The taxation of foreign citizens in the Netherlands implies paying the same levies as Dutch citizens, the only difference being that the former will only be taxed on the income they obtain here.
 
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.
 
Our Dutch company formation specialists can provide information on how hiring foreign employees can help business owners.
 

Expat incomes subject to taxation in the Netherlands

 
The following incomes generated by foreign citizens in the Netherlands are taxed here:
 
  1. income obtained through employment, which is based on a gross and net amount,
  2. the payroll tax which derives from the salary of foreign employees,
  3. various contributions for pension, healthcare and unemployment,
  4. income from investments and real estate ownership,
  5. 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:
 
  • - the employees must have been recruited from outside the Netherlands (they must have not lived here prior to getting hired);
  • - their work contracts are temporary.
 
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:
 
  • - work-related costs,
  • - travel expenses,
  • - housing and even daily expenses.
 
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%*,
  • - the maximum rate is set at 51.75*,
  • - under the Box 2 income, the rate is 25%,
  • - 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.

 

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