Dutch Tax Filing 2021: Tax on, tax off
2021-04-16 | By Tracey Taylor
The world of tax can be rather confusing at the best of times, particularly if you are an international living in a foreign country.
Tax. Just three letters. Worth 10 points on the Scrabble board, and seemingly innocent, but can often be complicated. Luckily, we are not alone, and there are many companies and advisors in the Netherlands who can help with issues and questions about tax.
For Jose de Boer of FVB de Boer, a broker for expatriate financial services, products, and financial advice, “the Dutch tax system is complicated, so we recom- mend a tax advisor for everyone’s tax returns at least.”
Internationals who attempt to file their taxes them- selves can often make a mistake (remember that that forms are in Dutch), and only afterwards will contact an advisor for help. While most errors are easily resolved, this can add extra time and stress into the process. Also, tax regulations can change a lot in a short period of time, and even though the Tax Office provides some information in other languages than Dutch, when filing taxes for the first time it is worth considering using a professional to help with the paperwork.
Any registered adult resident in the Netherlands is required to pay tax on income, wealth and assets. The amount of tax you pay will depend on your level of income. The Dutch Tax office (Belastingdienst) are the folks who send you those blue envelopes, collect taxes and are part of the Ministry of Finance. The Dutch fiscal year runs from 1 January to 31 December, but annual income tax returns need to be submitted between 1 March to 30 April.
“The most common misconception in the Netherlands is the high tax rate,” says de Boer. “It is true that our top rate is high compared to other countries, but there is a (modest) rebate on mortgage interest payments, rental income is tax-free – for private individuals – and we do not have a capital gains tax.”
Most financial advisors in the Netherlands recommend any internationals staying longer than two years to think about buying a house. If you do, the first thing is to find a local real estate agent, and de Boer agrees.
“A financial advisor should then be your next stop,” she says. “Independent financial advice is more beneficial than simply visiting your bank, since their advice is limited to their own products.”
If you’re a young international filing taxes for the first time, “you might be eligible for a tax break,” says de Boer. “Or even a rebate.” While the tax system can be complicated, it is worth remembering that, particularly for newcomers, you may be entitled to a tax return if either your income was low in the previous year, or if you bought a home. So, it seems that independent advice when it comes to finances, and specifically taxes, is important and might be beneficial for internationals living in the Netherlands. Luckily there are plenty of people out there happy to help.
You can also read some FAQs about Tax in the Netherlands.
Dutch Tax Office belastingdienst.nl
The main tax types in the Netherlands
Income tax (inkomsten-belasting)
Declared via your annual tax return (aangifte inkomstenbelasting).
Payroll tax (loonheffing)
A contribution deducted (generally once a month) from an employee’s salary by the employer.
VAT sales tax (BTW)
A sales or revenue tax (omzetbelasting): Businesses must add VAT (usually 21%) to the price of their goods and services.
Annual income tax return (aangifte inkomstenbelasting)
Even if payroll tax has been deducted from your salary, one may still need to complete an annual income tax return (usually applies to homeowners or if one is earning any additional income).
Pollution levy and water board tax
(verontreinigingsheffing and waterschapsbelasting)
Annual taxes applied for water purification (pollution levy) and the water board (maintenance of dykes/control of water levels) and can vary depending on your municipality.
Real estate tax (onroerendezaakbelasting)
Refers to a residence or a place of business–your local municipality will assess the value of any properties every two years.
Refuse tax (afvalstoffenheffing)
The collection, processing and disposal of household rubbish and the amount of tax due can vary per municipality.
If you have only lived in the Netherlands for part of the year, you must file a tax return using the M Form.
Road tax (wegenbelasting)
For those owning or importing a motor vehicle into the Netherlands, road tax is applied; it varies according to the size of vehicle, and if powered by petrol, diesel or electricity.