In this article, you will find a general overview of taxes in the Netherlands, including information on liabilities and the Dutch system for foreigners.
The Belastingdienst is the Dutch tax office, an entity of the Ministry of Finance, responsible for collecting taxes and social security contributions and providing updated information.
Who pays taxes in the Netherlands?
The residency status defines how much tax you pay; however, being a foreigner and moving into the Netherlands can qualify you for special tax rules.
- Resident: You pay taxes on your entire income worldwide.
- Non-resident taxpayers: You only pay income tax levied in the country.
- Qualifying Non-resident taxpayers: You live outside of the Netherlands but pay taxes in the country on most of your annual income (more than 90% of your worldwide income). You reside in an EU/EEA or municipalities of the Netherlands.
- Partial non-resident taxpayers: You move into the Netherlands and are eligible for the 30% tax ruling, meaning you pay less tax.
What is the 30% ruling?
The 30% ruling is a tax advantage for highly skilled migrants moving to the Netherlands for a specific employment role. When the necessary conditions are met, the employer can grant a tax-free allowance equivalent to 30% of the gross salary subject to Dutch payroll tax. This reimbursement is intended for the extra costs that international employees can incur when moving to a new country for work.
Below is a list of the conditions that need to be met:
- You have an employment relationship.
- You are recruited from another country by your employer or sent from another country to your employer. To prove this, the Employment Contract must be signed before the arrival in the Netherlands. Otherwise, the employee could lose the rights to this ruling.
- You lived outside the Netherlands for more than 16 months, at a distance of more than 150 kilometers from the Dutch border, two years before your 1st working day in the Netherlands.
To prove this, you must provide the following:- Bank statements, including cash withdrawals and debit card payments
- Monthly energy bills
- Monthly phone bills
- Your annual taxable salary must be a minimum taxable salary of 70%: EUR 39,647.00
For employees under the age of 30 with a master's degree, the minimum taxable salary is of 70%: EUR 30,001.00
How do I know if a Team Member is eligible for the 30% ruling?
- Collect proof and request an application form during the Hiring process.
- Share application with local payroll provider.
- Payroll provider sends the information to the local tax office in charge of approving the application.
What if the Team Member has lived in the Netherlands and joined the 30% ruling?
Note that the gap between the two employments cannot be longer than three months. To facilitate the application, request for the following:
- Previous approval letter
- Last 2 payslips
- Current application form to submit to the tax office
