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Income tax

People who live or work in the Netherlands or receive income from the country must pay taxes on their income to the Dutch government. The government can change the tax rates every year.

Non-resident taxpayers

Non-resident taxpayers are people who live outside the Netherlands but receive an income in or from the Netherlands, such as frontier workers. They must pay income tax on those components of their income that are directly related to the Netherlands. These income components are:

taxable income from employment and home ownership in the Netherlands. This includes:
- taxable income earned by carrying on a business through a permanent establishment (branch) or a permanent representative in the Netherlands (Dutch enterprise);
- taxable salary earned from work in the Netherlands;
- taxable income earned from other activities in the Netherlands (e.g. freelance work);
- periodic benefits in cash or in kind:
  - from a pension scheme to which a Dutch enterprise has paid contributions;
  - if the contributions were deducted from tax in the Netherlands;
rights to periodic benefits in cash or in kind under public law paid by or on behalf of a Dutch public-law body (e.g. central government, provinces and municipalities);
taxable income from a substantial interest in a company established in the Netherlands;
taxable income from savings and investments in the Netherlands. The Tax and Customs Administration levies tax on net assets in the Netherlands, i.e. assets less liabilities incurred for those assets. Assets in the Netherlands include immovable property located in the Netherlands and rights directly or indirectly relating to such property.

More information is available on the Tax and Customs Administration’s website: You live in another country and you have income from the Netherlands.

Opting for resident taxpayer status

Under certain conditions, taxpayers can opt for resident taxpayer status. Dutch tax deductions and tax credits are then applicable to their worldwide income.

Resident taxpayers are natural persons who live in the Netherlands. They must pay Dutch income tax on their entire income, even if that income comes from abroad. The government has concluded treaties to avoid double taxation.

For more information, see Income from abroad: in which country must you pay taxes?

Three categories of taxable income

There are three categories of taxable income, each having its own tax rate:

Box 1 taxable income from employment and home ownership

Income from employment (e.g. wages or business profits) and home ownership (e.g. income from renting out a house) is taxed progressively (available in Dutch only).

Box 2 taxable income from a substantial interest

Taxpayers hold a substantial interest if they own at least 5% of a company’s shares, options or profit-sharing certificates. Income from such an interest is taxed at 25%.

Box 3 taxable income from savings and investments

The Tax and Customs Administration assumes that savings and investments will earn a return of 4%. It taxes this assumed return at 30%. This is equal to 1.2% of the capital concerned.

Tax return 2010

If you are a non-resident taxpayer, you are required to file a tax return in the Netherlands if:

you have received an invitation to file a return;
you have received a C Form;
you have received neither an invitation to file a tax return nor a C Form but earned income in or from the Netherlands in the previous year on which you have not paid any tax or have not paid enough tax and over which you owe more than €44.

You also need to file a return if you have received neither an invitation to file a return nor a C Form but expect to receive a refund of more than €14.

To file your tax return, you can use the tax return program for non-resident taxpayers or a C Form.

Moving internationally

If you lived in the Netherlands for only part of the year because you moved to or emigrated from the Netherlands during the year, you cannot file your tax return electronically. You must always make use of the M Form.

More general information on the Dutch income tax system for non-natives is available at the website of the Tax Administration.