The Dutch tax system: paying taxes in the Netherlands (2024)

Types of tax in the Netherlands

When living in the Netherlands, you’ll encounter a wide variety of taxes. Some, like water authority tax (waterschapsbelasting), are charged at the local level, while others are paid nationally. Below is an overview of each type.

Dutch income tax

All residents pay income tax on their earnings from the previous year. Taxable income can include:

• Your salary and other income from employment (e.g., holiday bonuses)
• State benefits and pensions
• Business profits
• Interest on savings or investments
• Dividends from investments
• Wealth and property (if you own your own home)
• Received rent (if you rent out your property)

Usually, Dutch employers and pension providers withhold a percentage of your gross monthly salary or pension as wage tax (loonbelasting). That way, when it’s time to file your tax return, you won’t be stuck with a hefty bill.

Social security

All employees (and pensioners to a lesser extent) paysocial securitycontributions (sociale verzekeringspremies) to fund welfare benefits andstate pensions (Algemene Ouderdomswet – AOW). These contributions are taken out of your salary at the same time as your wage tax.

There are two types of social security schemes in the Netherlands:

• National Insurance (volksverzekeringen) is taken out of employee wages up to €38,098, with a maximum contribution of €10,534. It funds:
  • State pensions
  • Survivor benefits (Algemene nabestaandenwet – Anw)
  • Care for the elderly and those living with disabilities (Wet langdurige zorg – Wlz)
• Employee insurance (werknemersverzekeringen) is paid by employers and covers you during:
  • Unemployment (Werkloosheidswet – WW)
  • Illness (Ziektewet)
  • Chronic illness (Wet op de arbeidsongeschiktheidsverzekering – WAO)
  • Incapacity to work (Wet Inkomen en Arbeid – WIA)

In 2024, employees contribute 27.65% to National Insurance, while employers pay up to 26.75% in Employee insurance (depending on the job contract).

If you overpay, the Dutch Tax Office will refund you in your annual tax return.

Corporate tax

Public and private companies headquartered in the Netherlands must pay tax on their profits. Whether you need to pay income tax or corporate tax (vennootschapsbelasting– VPB) depends on thetype of businessyou run:

• Self-employed freelancers (zelfstandige zonder personeel –ZZP’er) and sole traders (eenmanszaak) are liable for Dutch income tax
• In public partnerships (maatschap)and commercial partnerships (vennootschap onder firma– VOF), partners are considered individual self-employed workers and thus pay income tax
• Limited companies (besloten vennootschap– BV) are liable for corporate tax

When you register your business with the Dutch Chamber of Commerce (Kamer van Koophandel), the Dutch Tax Office will inform you which tax you’re liable for.

The corporate tax rate is 19% for profits up to €200,000 and 25.8% for anything above that. Some companies can apply for an exemption to access lower corporate tax rates. The Dutch Tax Office’s website has more information.

Businesses must file their corporate tax return within six months of accruing company debt.

Advertising tax

Municipalities may impose an advertising tax (reclamebelasting) on marketing that is visible from the public road, regardless of whether it is on private or public land. Advertising includes billboards, illuminated signs, flags, large menus, and window ads.

Tax rates can differ per city, so it’s worth checking the website of your local authority.

Value Added Tax

Value Added Tax (VAT –omzetbelastingor, more commonly,Belasting Toegevoegde Waarde– BTW) applies to most goods and services.

The standard rate in the Netherlands is 21%, but a reduced rate of 9% applies to common goods, like art, books, food, medicines, and non-alcoholic drinks. The reduced rate also pertains to certain mainstream service providers, such as bicycle repair shops, hairdressers, taxis, and other useful occupations.

Some goods and services are exempt from VAT and pay a 0% tax rate. These include commercial fishing, international passenger transport, ship and aircraft manufacturing, solar panels, and worldwide export. The services of cartoonists, composers, journalists, and writers are also usually VAT-exempt.

Can you get a refund on VAT?

Visitors from outside the EU may be eligible for aVAT refundon purchases over €50 in the Netherlands. You’ll need to have a written agreement from the storeowner that they’ll refund your VAT, and you must file your claim within three months after the month of purchase and after leaving the country.

The Dutch government provides more information aboutreclaiming VATon their website.

VAT for businesses and freelancers

If you supply goods or services in the Netherlands, you must charge VAT, and the amount must be clearly shown on the invoice.

Likewise, freelancers and self-employed entrepreneurs must impose the tax. However, if your turnover is less than €20,000 a year, you can apply for thesmall business tax scheme(kleineondernemersregeling– KOR). If approved, you’ll be placed in the zero tariff category.

Import and export tax

Companies that import goods into the Netherlands usually have to pay import duties and VAT. Excise goods (e.g., alcoholic drinks, tobacco products, and mineral oils) are also subject to excise duties and other levies.

Likewise, some goods, such as agricultural or industrial products, must pay levies to prevent them from entering the European market at exceptionally low prices.

Dutch property tax

When you own property in the Netherlands, such as a home or commercial real estate, you must pay property tax. This is calculated based on the property’s rental value (waardering onroerende zakenorWOZ-waarde), which is adjusted annually by your municipality on 1 January.

The Netherlands has several types of property tax:

• Notional rental value (eigenwoningforfait) – if you live in a house that you own, the Dutch Tax Office considers that a source of taxable income (Box 1 income tax). That’s because homeownership allows you to build capital, unlike people who have to pay rent each month. The notional rental value is 0.35% for homes worth up to €1.31 million and 2.35% for more expensive real estate.
• Real estate tax (onroerendezaakbelasting– OZB) – you must pay a real estate tax, simply for owning your own landed property. Each can determine its own OZB tax rate, generally between 0.1% and 0.3% of the property value. The municipality must use these funds to invest in community interests, such as traffic lights, fire brigades, and the maintenance of green spaces.
• Movable property tax (roerende zaakbelasting – RZB)– if you own movable property (such as a houseboat (woonboot)), you must also pay property tax. This is the same as OZB but with a different name.

Second (third, fourth) properties are part of your wealth and assets (Box 3 income tax). Any income you derive from renting it out, on the other hand, is taxable under Box 1.Non-resident taxpayers (i.e., those living abroad) who rent out a Dutch property only pay tax on the rental income.

Property transfer tax

When you buy a house, land, or other property, the Dutch Tax Office usually levies a property transfer tax (overdrachtsbelasting). This is 2% for homes and 10.4% for anything else (e.g., a separate garage or parking structure). However, realtors (makelaars) often calculate this in the sale price of the house, so you won’t likely be charged extra.

Commuter tax

If you spend more than 90 days out of the year at a furnished home where you’re not registered, you may be liable for commuter tax (forensenbelasting). This applies to second residences like vacation homes or mobile homes. If you’re staying less than 90 days, you’ll likely be subject to tourist tax (more on that below).

Some exceptions apply. For example, prisoners, medical patients, and military staff are not subject to commuter tax. You can find more information on the municipality’s website.

Municipal tax

Every Dutch household and business pays an annual municipal tax (gemeentebelasting) and water authority tax (waterschapsbelasting).

Municipal taxes consist of:

• Sewerage levy (rioolheffing)– the sewerage levy is a fixed amount that pays for the right to be connected to the sewer system. It also applies if your home or boat uses a septic tank.
• Waste levy (afvalstoffenheffing)– the municipality charges a waste levy to collect, process, and dispose of household trash. The exact amount you pay depends on your locality and the size of your household.

Your municipal authority will most likely send you a combined bill that includes the OZB.

In addition to these municipal taxes, residents in the Netherlands are subject to water authority tax. This is collected by regional water boards (waterschappen), and pays for flood protection (maintenance of dykes and control of water levels) and clean water.

Water authority tax includes:

• Water purification levy (zuiveringsheffing)– wastewater (e.g., shower water) is typically discharged into the sewage system; the water purification levy pays to clean it. The amount is based on the size of your household.
• Water system levy (watersysteemheffing)– the revenue of the levy funds flood protection and waterway maintenance. It is usually a fixed rate.
• Water pollution levy (waterverontreinigingsheffing)– if you pollute the environment by discharging wastewater into surface water, you must pay apollution levy. Residents won’t likely see this type of levy on their tax bill.

Precario and demurrage

Municipalities may impose a precario tax (precariobelasting or simply precario) on objects placed on public land. Examples of taxed items are building materials, flags, neon signs, sunscreens, and terraces.

The tax cannot be levied if the object must be tolerated due to a legal or contractual obligation. For instance, phone and TV cables are legally tolerated. As such, they are not subject to taxation.

If your home or trading space has a fixed site on public land or water, you may be subject to demurrage. Demurrage is translated into two different things, depending on the public space. For example, houseboats and commercial vessels with fixed mooring are liable for liggeld. Likewise, travelers (e.g., Roma or Sinti) with a caravan or trailer on municipal land must pay stageld or staangeld.

Precario and demurrage rates differ per city, so it’s worth checking the website of your local authority for more information.

Dog licenses

Due to a long-standing medieval custom, municipalities may require residents to pay for adog license(hondenbelasting) if they have one or more dogs. They can use this to fund publicly available dog poop bags and bins, for example.

Your local authority is free to set its own rules. For example, some exempt service dogs for the blind and visually impaired, while others do not. Visit your municipality’s website to learn about its dog licensing policy, including the fines for nonpayment.

Tourism tax

Municipalities may charge visitors from outside their bounds (including Dutch nationals) a tourism tax (toeristenbelasting) for paid accommodation. This applies to commercial businesses like apartments, campsites, hotels, and private individuals who use their homes for holiday rentals or bed and breakfasts (including Airbnb).

Some cities also tax their waters. For example,Amsterdam imposes a tourist tax of €14 per passenger on operators of large cruise ships or riverboats.

Tax rates differ per municipality; you can find more information ontheir respective websites.

Road and parking tax

Vehicle owners must pay motor vehicle tax (motorrijtuigenbelasting –mrb) every three months. The amount varies per vehicle type, depending on weight, fuel type, and environmental impact.

The Dutch government requires certain vehicles to pay a tax surcharge. For example, some heavy trucks are subject to an additionalheavy vehicle tax(belasting zware motorrijtuigen –bzm). Likewise, owners of older diesel cars must pay an extraparticulate matter surchargeor soot tax (fijnstoftoeslag).

In other cases, your vehicle may be tax-exempt. There’s a zero tariff for fully electric and hydrogen-powered cars. Similarly, vintage cars may have a reduced rate or pay no road tax at all.

Vehicles must be registered with theNetherlands Vehicle Authority(Rijksdienst voor het Wegverkeer – RDW). The Dutch Tax Office will then automatically send a tax assessment. You can also use theonline tax calculator(in Dutch) to budget for your upcoming motor vehicle tax bill.

When you drive in the Netherlands, it’s only natural to assume you have to park your car somewhere. Parking your vehicle in a public space often requires parking fees (parkeerbelasting); you pay this in the form of a parking ticket (parkeerkaartje) or parking permit (parkeervergunning).

Environmental tax

The Netherlands imposes several taxes to protect the environment. For example, aplastic taxwas introduced in July 2023 to prevent the use of disposable plastics. Consumers now pay an extra €0.05-0.50 for single-use cups and containers that are made with plastic.

Other Dutchenvironmental taxes(milieubelastingen) include:

• Carbon tax (CO2-heffing)– companies that emit carbon dioxide must pay asurcharge
• Coal tax (kolenbelasting)– people who mine, produce, or import coal to use or sell as fuel must pay fuel tax. Coal used to generate electricity is tax-exempt.
• Energy tax (energiebelasting)– energy tax is levied on the consumption of electricity, natural gas, and certain fossil fuels. Some companies are allowed to emit greenhouse gases (emissierecht); for more information, see theDutch Emissions Authority(Nederlandse Emissieautoriteit).
• Flight tax (vliegbelasting)– airplane passengers over the age of 2 leaving from a Dutch airport must pay a €29.05 flight tax per passenger per flight (excluding transfers)
• Groundwater levy (grondwaterheffing)– corporations that pump large amounts of groundwater are liable for a groundwater levy. This tax doesn’t apply to homes with a regular water pump in their garden.

Capital gains tax

Capital gains tax is what you pay when you sell, give away, or get compensation for something that has increased in value since you obtained it.

The Netherlands does not tax capital gains. Instead, the Dutch Tax Office assumes that you have a return of up to 5.69% over your total asset value, irrespective of whether your actual gains are lower or higher. Whatever dividends you derive from wealth and assets are then subject to income tax.

Gaming tax

If you win a large prize (worth over €449) in a lottery or online game, you’re liable for gaming tax (kansspelbelasting). This tax does not apply when you win a working pool (e.g., colleagues betting on the world championship football). In 2024, the gaming tax rate is 30.5%.

Sometimes, the organizers pay the gaming tax for you (this will be set out in their Terms and Conditions), and other times, you’re required to foot the tax bill yourself. If the organizer is based in the Netherlands, they will subtract the gaming tax from your winnings and pay the remainder.

Dutch gift tax

To prevent inheritance tax fraud, residents and non-residents must pay a gift tax (schenkbelasting) when they receive a money donation from someone in the Netherlands. This levy also applies when:

• The gift-giver is a Dutch citizen who has been living abroad for up to 10 years
• The donor is a foreign national who has been living outside the Netherlands for up to a year

You don’t have to pay gift tax if you receive a donation from abroad from someone who has never lived in the Netherlands.

The tax rate depends on the donation and the relationship between you and the gift-giver:

Certainexemptions(schenkingsvrijstellingen) apply. For example, some charity organizations (ANBI, SBBI, or SBBI support foundation) do not have to pay gift tax. The following other donations are also tax-free:

• Parents may gift their child €6,633 per year, including foster and stepchildren
• Good samaritans may donate €2,658 per year to someone else, including family members and random strangers
• Parents may gift their adult child (aged 18–40) a one-off €66,268 to pay for an expensive study program
• Parents may gift their adult child (aged 18–40) a one-off €31,813

Business owners may also pass their organization on to someone else tax-free, provided the situation meets all requirements. You can read more information about thebusiness succession scheme(bedrijfsopvolgingsregeling– BOR) on the Dutch Tax Office’s website.

You must file your tax return within two monthsafter the end of the calendar year in which you received the donation.

Gift tax to settle urgent debt

In some cases of extreme debt, you may be granted a special tax exemption (bijzondere vrijstelling voor dringende schulden). This applies only to very urgent situations, for instance, if you need money to pay off rental debt and would be evicted otherwise. The debt must also be so severe that you cannot possibly pay it by yourselves, even if you’d sell all your assets.

To apply for the special tax exemption, you must file a gift tax return with the Dutch Tax Office and tick the box ‘special exemption for urgent debts’.

Inheritance tax

After someone’s death in the Netherlands, their next of kin may be liable for inheritance tax (erfbelasting), should theyaccept the inheritance. They must file the tax return within eight months of the death.

Some parts of the legacy are tax-exempt (vrijstellingen erfbelasting), depending on your relationship with the deceased:

Other amounts that are tax-free include accident benefits, death benefits, and posthumous wages.

After that, the following tax rates apply:

If the death occurred abroad, you may not be subject to Dutch inheritance tax. For example, if:

• The value of your inheritance is less than or equal to the above-mentioned tax exemption
• The deceased was not a Dutch citizen and did not live in the Netherlands
• The deceased was a Dutch national but died after having lived more than 10 years abroad

In those cases, you will likely have to pay the inheritance tax of the other country.

Funeral rights

The municipality may charge you for the right to use a cemetery or crematorium and for their services. While these are called funeral rights (lijkbezorgingsrechten), they are not free and your next of kin does actually have to pay.

The amount differs per city and burial place; for example, historic cemeteries may have higher charges. The local funeral director can explain more about this tax.