Here at InAxtion, a lot of our employees travel from other EU countries to work on projects in the Netherlands. One of the questions our consultants get asked all the time is how the Dutch tax system works.
For non-Dutch speakers, it’s not always easy to find this information online. Whilst we’re certainly not tax advisors, we do help employees understand their rights and responsibilities for paying tax in the Netherlands. Here’s an introduction.
What is the Dutch tax system?
The Dutch Tax and Customs Administration – Belastingdienst – is the government agency responsible for collecting taxes in the Netherlands. This includes income tax as well as various other taxes and duties.
Earnings from employment in the Netherlands are subject to income tax. If you’re an employee, income tax is automatically deducted by your employer. It’s known as ‘payroll tax’, and it works like this: the tax is calculated and deducted from your weekly or monthly paycheck by your employer.
Some people are required to complete an annual tax return if their income is more complicated, or if they receive income from multiple sources. In January, the tax administration sends people a letter – aangiftebrief – telling them to complete a tax return for the previous financial year.
If your income is simple – say you did one 4-month project in the Netherlands during the previous financial year – you may not be asked to submit an annual tax return.
- If you’re visiting the Netherlands to work, it’s important to be aware of the difference between bruto salaris – gross salary, the amount before tax – and netto salaris – net salary, the amount after tax is deducted.
Which taxes apply to you?
Good question! InAxtion is an employment agency. InAxtion employees are employed by the company. That means if you’re an InAxtion employee, you’re liable to pay income tax in the form of ‘payroll tax’. Think of ‘payroll tax’ as a tax on wages plus national insurance contributions (which pay for the country’s benefits and allowances system).
Both residents and non-residents in the Netherlands are liable to pay income tax. People who spend fewer than 4 months in the Netherlands can register as nonresidents in the Nonresidents Records Database (RNI) at one of 19 municipalities.
- Many InAxtion employees on short-term contracts fall into the ‘non-resident’ category, so our consultants are familiar with helping people register with a municipality.
How much income tax do you pay?
The amount of tax due is based on your taxable income and your age. The tax rate is reviewed and changed every year, but here’s a recent example:
If you’re below the age of 67 during 2024 then earnings up to €75,518 are taxed at a rate of 37%. Anything above that is taxed at 49%. People reaching the age of 67 in 2024 pay a reduced rate of income tax on their first €38,098.
Check if you’re due a tax rebate!
In the Netherlands, the financial year runs from January 1st to December 31st. That means, if you begin a project part way through the year, and tax is deducted from your pay, you may be entitled to a tax rebate at the end of the tax year.
The reason for this is simple. Income tax is worked out on the basis of your total earnings over the entire financial year. So, for example, if you’re employed on one 3-month contract – and have no other form of income for that financial year – it’s possible that you could overpay tax.
- Non-residents working in the Netherlands should always seek professional tax advice. This helps ensure two things. One, compliance with Dutch tax laws. Two, their tax position based on individual circumstances and any applicable treaties.
If you’re an InAxtion employee, our consultants can give you general advice on taxation, and even help you find a suitable tax advisor. Contact your consultant for more information.
