Taxes & Social Security

Income Tax

When you receive income in the Netherlands, you are required to pay income tax. The Dutch tax system works along with the more you earn, the more taxes you pay as a percentage of your income.

If you are employed by a company, the income tax is already included in your salary. Then your employer deducts the income tax before the monthly payment, which means you get net wages transferred to your bank account. However, if you are self-employed, you must calculate and pay your income tax via the annual tax return.

You declare your income tax digitally via the Tax Administration’s (Belastingdienst) website. However, the website is only available in Dutch, so if you need help filling out your taxes, it is wise to get help from a tax advisor.

Payroll Tax

Payroll tax consists of wage tax and other contributions that are withheld from your salary by your employer, which saves you from having to pay them later as income tax. When discussing your salary, you should keep the deduction in mind because there is a significant difference between your gross salary (bruto salaris), which includes tax, and your net salary (netto salaris), after the tax is deducted.

Tax return

Even though your wage tax has already been withheld from your gross salary, you often still need to complete an annual income tax return. This might be necessary to balance out the already-paid wage tax with other financial aspects such as your partner’s income, a mortgage, other income sources, or tax deductions such as study or healthcare costs.

The Dutch fiscal year runs from January 1 to December 31, and the period for submitting your annual income tax return is from March 1 to April 30 unless you request an extension.

30% Ruling

The 30% ruling is a tax advantage for expats working in the Netherlands, meaning that 30% of your salary won't be taxed. This ruling can be seen as compensation for your expenses as you are working outside your home country. To check eligibility for 30% ruling please check Tax Administration's website.

💡Keep in mind that once you apply to use the 30% ruling, it might take up to 10 weeks until you hear the response.

Social Security

Welfare system in the Netherlands can be divided into three categories:

• National Insurance: National insurance is administered by the Social Insurance Bank (SVB), which includes old-age pension (AOW) and child benefit (AKW).
• Employee Insurance: Employee insurance is administered by the Employee Insurance Agency (UWV). The Dutch employee insurance covers unemployment and long-term disability.
• Social Assistance: Social assistance is administered by the municipalities. For instance, when someone has insufficient means to support themselves, they are eligible for social assistance.

General Old Age Pensions Act (AOW) is a basic pension for people aged 67 and older. Anyone living and working in the Netherlands is insured for the state pension AOW. This basic provision entitles one person to a monthly gross payment of around EUR 1,000 and a married person to around EUR 700 (excluding holiday allowance).

Unemployment insurance (WW) is benefits for the fully or partly unemployed to compensate for the loss of earnings. It's paid out for a certain period and serves as a bridge between two jobs, with the condition that you must be available for work. The amount and the duration of the benefit depend on your employment history and the time you spent working.

Child benefit (Kinderbijslag) contributes to parents towards the costs of raising and caring for children aged up to 18 years. Therefore, how much child benefit a person receives depends on the child's age.

Work and Social Assistance (WWB), grants a minimum income to anyone legally residing in the Netherlands who has insufficient means to support himself/hersel. However, if someone from a household has adequate income, the family is no longer eligible for assistance.

Sickness benefits (Ziektewet) applies only to those who are sick and do not have or no longer have an employer. The sickness benefit amounts to at least 7% of the daily wage. People who do have a job receive part of their salary from their employer over a certain period that can add up to 24 months. Depending on which sector you’re working in, the minimum you will receive is 70% of your salary for 12 months.

There are specific conditions for every benefit. Therefore, please consult the Ministry of Social Affairs and Welfare for more information.