Personal Income Tax
Find out about the payment of taxes on income in the Netherlands...
Dutch Personal Income Tax is the final Dutch tax due on the employee's taxable (earned and/or non-earned) income. The Dutch Government Tax Offices provides information.
Double Taxation
Because of the potential for double taxation of income, and the denial of deduction for expenses, taxes are a significant issue for most international employees. The Netherlands is a member of the Organisation for Economic Co-operation and Development (OECD) and has an extensive network of double tax treaties based on the OECD model convention, aimed at avoiding double taxation of the same income and discrimination on the grounds of nationality.
The normal principle of a double tax treaty is to permit the host country to tax the earnings of the international employee first, with the home country giving an exemption or a credit for tax on the same income where it is still liable in that jurisdiction. International employees on short-term assignments can sometimes escape host country liability by taking advantage of certain treaty provisions. Where there is a conflict between the laws of the home and host countries over which has the right to tax, the treaty usually provides a tiebreaker.
Employees will be taxable in the Netherlands for their taxable Income. This income could consist of income generated worldwide (resident tax liability) or of income generated from a limited number of (Dutch) sources (non-resident tax liability). A combination of both is also possible (partial non-resident tax liability).
When to File a Personal Income Tax Return
Dutch personal income tax is levied together with the general insurance contributions in one amount, although a split can be made. The amount of the final tax/general insurance contributions is determined on the basis of the taxable income reported in an annual income tax return filed with the Dutch Tax Authorities. The Dutch tax year is the calendar year.
Where an individual is entitled to a refund of income tax, he or she can ask the Dutch tax authorities for a preliminary tax refund to be paid during the current year.