The Dutch tax system is administered by the Tax and Customs Administration (in Dutch: Belastingdienst). The more income you earn, the higher the percentage of income tax you will pay. The system is designed to ensure fairness, with the aim of redistributing wealth and providing quality public services. Besides the familiar income and sales tax (in Dutch: BTW), other forms of taxation include import tax, motor vehicle tax, inheritance and gift tax, corporate and transfer tax, and gambling tax.
Income and payroll tax
As an employee in the Netherlands, your due income tax (in Dutch: inkomstenbelasting) will, in most cases, be deducted from your monthly salary by your employer. This is the so-called wage tax, which is contained within the more general payroll tax (in Dutch: loonheffing). Aside from wage tax, payroll tax includes other contributions which your employer deducts from your monthly salary, such as national insurance payments to pensions and unemployment benefits. Because payroll tax is deducted from your gross monthly salary, there is a significant difference between your gross salary (in Dutch: bruto) including taxes, and your net income (in Dutch: netto), after tax.
Although wage tax is deducted from your monthly salary as an advance payment on your due income tax, you might still be asked to complete an annual income tax return (in Dutch: aangifte inkomstenbelasting). The Tax and Customs Administration will inform you if you are indeed required to do so. Besides actual income from employment, the tax return also takes account of other financial factors, such as savings or investments, or tax deductions for studies or healthcare costs. In most cases, the annual income tax returns are filed between March 1 and April 30, although it is possible to request an extension online, if you have a DigiD. You may be fined if you do not action in time or if you do not properly declare your income. For the first few years in the Netherlands, or if you also pay taxes abroad, it is advised to request a tax advisor to assist you with your tax return, the so-called M-form. Your case manager can connect you to someone to support you.
30% tax facility
The Dutch tax system also includes the so-called 30% tax facility, which is a tax advantage for highly educated migrants moving to the Netherlands for work. With your move to the Netherlands, you may incur additional expenses, so-called extraterritorial costs. These costs are, for instance, additional costs of living, double housing costs, or costs related to storage fees and travel expenses. To cover these additional costs, your employer can grant you a tax-free allowance of 30% of your gross salary. This is the 30% tax facility.
You can apply to make use of the 30% tax facility if you meet certain, strict conditions:
You work in paid employment.
You have specific expertise that is not or hardly found on the Dutch labour market. In 2024, this is the case if your taxable income exceeds €46,107, or €35,048 if you are younger than 30 years old and have a Dutch master's degree or foreign equivalent.
You were recruited outside of the Netherlands, at a distance of more than 150 kilometers from the Dutch border.
You already have a valid decision.
From 2024, several changes have become applicable to the 30% tax facility. First, the tax-free allowance you will receive is a maximum of €69,900 if you have a salary of €233,000 or higher, and will use the 30% tax facility all year. If you only use the 30% tax facility partially, your maximum reimbursement will be lower. Additionally, the reimbursement is no longer 30% for the entire term of the decision. Whereas the ruling was previously 30% of your salary for five years, from 2024 onwards, you are only entitled to a maximum reimbursement of 30% of your salary for the first 20 months of the term of your decision. You are entitled to a maximum of 20% for the second 20 months, and over the third 20 months a maximum of 10%. If you already had a decision in 2023, you may still be entitled to a tax-free reimbursement of up to 30% for the entire term.
Your application should be submitted within four months after you start working for your new employer. If you do, you can use the 30% tax facility from your first working day. If you don't, the start date of the decision will be adjusted accordingly. Your case manager can help you collect the necessary documents, check your eligibility, and assist with the application. The application needs to be submitted in agreement with your employer, so make sure to discuss your situation beforehand.