In the Netherlands, taxes are scaled according to income levels but are generally
quite high. The fiscal year is the calendar year. Citizens have to report their
income of the previous year, latest by March. The system integrates tax with
fees paid for the basic old-age pension system AOW, the pension system for partners
of deceased people AnW, and the national insurance system for special medical
care AWBZ.
From 1 January 2001, there are three types of tax
for taxable income. These types of income are brought together in three so-called
boxes:
- Box 1: taxable income from work
and home;
- Box 2: taxable income from substantial
interest;
- Box 3: taxable income from savings
and investments.
Tax rate for Box 1 (income from work and home) is a
rising scale with four brackets. The rates
are (2008):
- 33.60% on the first EUR 17,579
- 41.85%
on the next EUR 14,010
- 42% on the next EUR 22,271
- 52% on the remainder
A fixed rate of 25% is charged on income from substantial
interest (Box 2)
A fixed rate of 30% is charged on income from savings
and investments (Box 3)
Expats can expect a tax relief in the form of the 30
Percent Ruling. This is a personal income tax reduction for specialized foreign
employees whose skills are scarce in the Dutch marketplace.
The 30 Percent Ruling compensates employees for the extra costs of their temporary
stay in the Netherlands. It allows an employer to pay an employee a tax-free
allowance of up to 30 percent of the employee's total remuneration (the "Basis")
for the first 10 years of their stay in the Netherlands. In addition, the employer
may also provide a tax-free reimbursement of the fees paid for the employee's
children to attend an international school.
A similar ruling also applies to compensate Dutch employees who are assigned
to work in designated developing countries.
Sources:
- http://www.expatax.nl/incometaxexpatax.htm
- http://en.wikipedia.org/wiki/Income_tax_in_the_Netherlands
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