Chesterfield (London) 
207 Old Marylebone Road
Tel: +44 (0) 203 771 3853
Fax: +44 (0) 203 771 3856

Dutch Income Tax

Before accepting a foreign contract, a contractor needs to consider carefully the taxation and other requirements of the country they are going to. Before accepting a foreign contract, a contractor needs to consider carefully the taxation and other requirements of the country they are going to.

Contractors working in Holland are often expected to be fully compliant payroll solution in the Netherlands and we can provide you with a payroll solution that will ensure you get paid accurately and on time. 

Holland has a progressive tax system which for employees can mean that they are subject to 52% tax including social contributions on any earnings of €56,492 per annum. Expatriates often qualify for what is often called the “30 % Allowance “which enables them to receive 30% of their income free of any taxes when using a tax compliant solution. Therefore, there can be a lot of taxation advantages to being an expatriate contractor over a Dutch national. 

Should you work in Holland for 183 days you may be considered resident in the Netherlands for tax purposes from the date of your arrival. For some contractors , for example , those leaving the UK, it is often not possible to use your own company it is a legal requirement, that any individual working in the Netherlands must be employed by a Dutch payroll provider.

Dutch Income Tax Rates
Taxable Income Band € National Income Tax Rates
1 – 18,945* 1.95%
18,946 – 34,055 10.8 %
34,056 – 54,491 42 %
56,492 + 52%

The income tax rates are progressive and the table above is based on the rates that applied for 2012. Tax allowances are available to all taxpayers and depend on your personal circumstances and deductions are allowed for certain types of expenditure. The rates above do not include social security or communal taxes. 

In the Netherlands municipal taxes are payable and these can increase the amount of tax payable by up to 1 or 2%.

As a general rule, all residents are entitled to a general tax credit (EUR 2,033 in 2012) and may qualify for other credits. The employed person's tax credit is age- and income-related average cases EUR 1,533 in 2012. Other tax credits such as the single parent's tax credit (EUR 947 to a maximum of EUR 1,319 were available to qualifying taxpayers in 2012). The general tax credit comprises an income and social security element (to which you are only entitled if you have compulsory Dutch social security coverage other allowances and potential refunds when are available when you file your tax return.

Where possible, partners are taxed individually but, when only one partner works, the other partner is generally entitled to a refund of general tax credit and deductible expenditure can be apportioned to take advantage of tax credits. The conditions for unmarried couples to qualify as a partner in 2011.

The tax year is the calendar year and runs from 1st of January to 31st of December. The annual tax return dead line is 1st of April for the previous tax year.
At Chesterfield Management we can discuss with you the options and available solutions where you can reduce your tax bill in the Netherlands.

To learn more contact us on our office telephone number 0044 (0)2070971385, request a call-back, or click here to email us

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