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Taxation in the Netherlands

Taxation in the Netherlands
Taxation in the Netherlands

Everyone who lives in the Netherlands and receives income, pays income tax in principle. The Dutch Ministry of Finance (Ministerie van Financiën) is responsible for the implementation of national tax legislation, whilst the Belastingdienst takes care of the actual execution of the legislation. Whether as an expat (working in the Haarlemmermeer region) or Dutch national, if you earn money whilst living in the Netherlands, you are required to pay taxes.

The amount that you have to pay in terms of income tax depends on the amount of your income and assets. In the Netherlands, income sources are subdivided into 3 categories. These 3 categories are called boxes. Because of this classification, the Dutch tax system is called the box system. The amount of the tax rate depends on the source of income, the amount of income (taking into account any deductions). The total amount of income tax consists of the balance of the 3 boxes.

Which boxes does the box system consist of?

As described above, the Dutch income tax system is divided into 3 boxes. We will briefly discuss these boxes below. If you click on the links, you will receive a detailed explanation per box.

Box 1: taxable income from work and home

In box 1, the income from work (wages, business, benefits, other activities) and owner-occupied home (owner-occupied home lump sum) are added together. The deductible items may be deducted from this amount (such as mortgage interest and expenses for income provisions). Income tax is due on the balance, the higher the rate becomes, the higher the balance.

Box 2: taxable income from a substantial interest

In box 2 the income from a substantial interest is taxed. A substantial interest exists if a taxpayer (whether or not together with his or her partner) holds at least 5% of the shares in a company. This also includes indirect share ownership. The income from a substantial interest can, for example, consist of dividend and profit from the sale of shares. Any costs may be deducted from this amount. Income tax is due on the balance.

Box 3: taxable income from savings and investments

In box 3, income from savings and investments is taxed. A taxpayer must calculate the balance of assets and liabilities on 1 January of a year. The taxpayer must pay capital tax on the balance as soon as the amount exceeds a certain basic amount.

Want to Find Out More?

More extensive information on income tax can be found on the website of the Tax Authorities (Belastingdienst).