In each different country there are a lot of different rules when it comes to the taxes of the specific country, this also applies to the complicated taxes in the Netherlands. With the specific benefits, rules and progression, the tax rules for this country can be complicated. The objective of this informative article is letting people from other countries who have a interest in the Netherlands get a better idea on how the tax systems works here.
One of the key aspects of the dutch tax system is the 3 different “boxes” where their earnings would fall in to, each box has a different set of rules and tax rates which make it important to have a clear understanding of the difference between the three.
Box 1 includes from different sources of income from business, employment and home ownership, most of the people’s income falls under box 1. And for this reason its crucial to have a clear idea about how the taxes and rules work so that you might be able to use these rules to your advantage. The box 1 system uses a progressive tax rate which means the more you earn, the higher percentage of taxes you will have to pay. If your yearly income is below €69.397 then you will have to pay 37,07% for the taxes. Anything you earn above this amount will be taxed for 49,50%.
Box 2 of our tax systems covers the income people receive from interest, this generally refers to shares when you have more then a 5% ownership of a company. For this reason most people dont fall under this box, but if there is interest for investing a large amount of money into a company its wise to keep this rule in mind. The income received from this interest stands at a flat 26,9% which means it doesn't matter hoe much money you earn from these shares, they will always be taxed for 26,9%.
Box 3 applies to income from investments and savings, this includes any bank accounts and investment portfolios as well as properties not used as your primary residence. Instead of taxing your actual income from these sources the dutch tax systems assumes an return based of the total of your assets. The first €57.00 of assets is tax free (€114.00 applies to couples), above this exemption everything is taxed at 31% on the assumed return of your assets.
One of the most attractive tax advantages that expants can make use of is the 30% ruling, this benefit allows eligible expants to receive 30% of their salary tax-free. There are some requirements to qualify for this ruling like earning more then €41.000 a year as an expant (if you are under 30 with a masters degree this requirement is slightly lower).
Conclusion
Understanding the dutch tax system is a crucial piece of knowledge to have if you are thinking of moving to the Netherlands. Knowing these basics will make reporting your taxes a lot easier and you might get to use these rules as an advantage in specific cases like the 30% ruling. With a little preparation you will be able to understand the dutch tax systems and have more free time to enjoy your time in the Netherlands.
Author: Leon Ariëns
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