The “blue envelope” received by post, in the first year I came to live in the Netherlands was my first meeting with the Tax Administration. It is an invitation from the Tax authorities to declare your income and assets (shares, savings, and properties). If you did not receive this notification, you do not have to complete one unless you know that you have to, or want to file a tax return. Based on your Income Tax Declaration, the Dutch Tax and Customs Administration will decide whether or not you are entitled to a rebate (refund of excess paid in tax) or whether you have to pay extra, due to insufficient tax having been paid.
The Dutch tax revenue department, known as the Belastingdienst (Belasting = tax, dienst = service) collects income tax, and the tax rates can change every year
The fiscal year is the same as the calendar year. Each year, before the first of April, citizens have to report their income from the previous year. This period can be quite stressful for many people, and particularly for the expats in the first years, as they have to do their tax in a new language and in a new tax system.
Which income will be taxed in the Netherlands?
If you are resident in the Netherlands (For example if you live here, you work here, or your family is based here), you must pay tax on your worldwide income there.
If you are not resident in the Netherlands, you only pay tax on income earned there.
If you receive income from other EU countries, check well in which country you should pay your income tax because you never pay tax twice on the same income.
Filling your taxes
You can file your taxes digitally via the Belastingdienst website using DigiD (a digital signature). The program is only available in Dutch. The other option is to enlist the help of an English-speaking tax accountant or adviser. It is important to keep in mind that arranging for a DigiD account can take a few weeks.
What determines how much taxes you pay?
There are three types of tax for taxable income, which are brought together in three so-called boxes:
Box 1 applies to employment income/home ownership,
Box 2 applies to income from a substantial interest in a company, and
Box 3 applies to income from savings and investments.
The Netherlands has one of the highest income taxes in the world. For 2016, the total tax on income (income tax plus mandatory pension, social security and state funded medical care payments, all of which are a percentage of income up to a maximum) for people under the age 65 (retirement age) is as follows:
• For the part of income up to € 19,922: 36.55%; tax on €19,922 is € 7,281
• For the part of income between €19,823 and €33,715: 40.40%; tax on €13,793 is € 5,572
• For the part of income between €33,716 and € 66,421: 40.40%; tax on €32,706 is €13,213
• On all income over € 66,421: 52%
30% ruling?
If you are recruited or transferred from another country for a position in the Netherlands, and if certain requirements are met, you may qualify for a special tax arrangement, known as the 30% ruling. This means that only 70% of your salary will be taxed, effectively lowering the tax rate. You must have "specific expertise" in your field and a minimum salary requirement for the position will apply. To get this ruling, both you and your employer must file a detailed application at the tax office.
After submitting a tax return, it takes between 6 to 12 weeks to receive your preliminary assessment (estimation) from the tax authorities. Once the tax authorities have checked the return, you will receive a final assessment along with payment or refund details.
It is important to note that there are other factors that can affect the tax calculations.
More information on the English website of theBelastingdienst