Individuals and companies in the Netherlands have plenty of benefits. From great living, respectively business conditions to tax exemptions and deductions, to name just a few, the Dutch authorities provide various advantages to both categories.

When it comes to taxation, there one difference between the levies applied to residents and non-residents and it consists in the tax base. Residents are taxed on their worldwide income, while non-residents only on the income they make in the Netherlands.

When it comes to the tax deductions and exemptions available in the Netherlands, our local agents can offer detailed information. You can also rely on us if you want to open a Dutch company.

Incomes that can benefit from tax deductions and exemptions

From employment to corporate profits, all categories of taxpayers in the Netherlands can benefit from tax deductions or exemptions offered by the local authorities. While some of these are granted the same way for a number of years, other are available for short periods which is why when it comes to paying taxed in the Netherlands, one should seek for updated information.

An individual can obtain a tax deduction in the Netherlands for employment-related income or expenses. The same applies to a company which can obtain a deduction or exemption for various expenses or taxes.

If you need to find out whether you qualify for a special tax exemption in the Netherlands, you can discuss with one of our specialists.

Tax deductions and exemptions for individuals in the Netherlands

A natural person can obtain a tax deduction on the following:

public transportation when commuting for work from one city to another;
expenses related to raising children (this is available for underage children only),
temporary inability to work (the medical expenses can be deducted),
home ownership or rental expenses can also be subject to a tax deduction in the Netherlands.

When it comes to a tax exemption that can be obtained by an individual living in the Netherlands, any of the following can be obtained:

- the labor tax credit,
- the 30% advanced tax ruling (which is available for foreign employees of Dutch companies),
- the general tax credit.

When it comes to applying for a tax deduction or exemption in the Netherlands, an individual must also meet certain requirements in order to obtain it. For this, one must file various supporting documents with the Dutch tax authorities.

Our company formation agents in the Netherlands can offer more information on how to apply for a tax deduction or exemption as an individual.

Tax deductions and exemptions for companies in the Netherlands

When it comes to Dutch and foreign companies, these can benefit from a wider range of tax deductions and exemptions in the Netherlands.

Perhaps the tax deduction related to double taxation is the best known by foreign companies in the Netherlands. However, these can also obtain a tax exemption for a certain type of income, if the agreement with the Netherlands allows it.

When it comes to tax exemptions for companies in the Netherlands, there are also the following:

- research and development activities-related exemptions,
- the 30% tax ruling which also applies to companies hiring foreign workforce,
- for private limited liability companies set up as small companies a tax exemption for the first 3 years of operations is available in the Netherlands.

The same rule related to filing various papers that justify qualifying for a tax deduction or exemption is also required in the case of companies.

Dutch businesses registered for VAT can also claim back this tax if they meet all the requirements imposed by the tax authorities.

Our Dutch company formation officers can offer updated information on the tax deductions and exemptions available for businesses in this country.

Why start a business in the Netherlands?

Tax deductions and exemptions are not the only reason to relocate or to start a company in the Netherlands.

According to Focus Economics:

- in 2019, the Dutch economy increased by 1.8%,
- after a contraction due to the Covid-19 pandemic in 2020, this year, the Netherlands' economy is expected to increase by 3.5%,
- in 2022, things are expected to settle even more and bring a growth of 2.5% for the Netherlands’ Gross Domestic Product.

The Netherlands remains one of the most prolific economies in Europe and if you need information on the tax deductions and exemptions offered by the government, you can ask for information from our representatives. You can also contact us if you are interested in starting a new business or expanding an existing one to the Netherlands.

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