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The Netherlands (Dutch: Nederland), often incorrectly termed Holland, is a country in Northwestern Europe with some overseas territories in the Caribbean. In Europe, it consists of 12 provinces that border Germany to the east, Belgium to the south, and the North Sea to the northwest, with maritime borders in the North Sea with those countries and the United Kingdom.
Together with the Caribbean Netherlands —Bonaire, Sint Eustatius and Saba—it forms a constituent country of the Kingdom of the Netherlands. The official language is Dutch and a secondary official language in the province of Friesland is West Frisian. In the north and east of the country, Low Saxon is also spoken, and in the southeast, Limburgish. In the Caribbean Netherlands English and Papiamento are recognised languages.
The Netherlands has a developed economy and has been playing a special role in the European economy for many centuries. Since the 16th century, shipping, fishing, agriculture, trade, and banking have been leading sectors of the Dutch economy. The Netherlands has a high level of economic freedom. The Netherlands is one of the top countries in the Global Enabling Trade Report (2nd in 2016), and was ranked the fifth most competitive economy in the world by the Swiss International Institute for Management Development in 2017. In addition, the country was ranked the second most innovative nation in the world in the 2018 Global Innovation Index.
Highlights
Residency Programs (2)
Cost of Life
Taxation overview
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Tax system
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Residence-based taxation
Countries with a residence-based taxation levy tax from your worldwide income for as long as you're a tax resident of that country. This is the most common taxation system.
Tax residence definition varies from country to country. General rule is you're a tax resident of a country if you spend 183 days or more in it in a year.
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Tax summary
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Personal income tax (PIT) (Box 1 income)
Progressive tax up to 49.5% above €68,507 ($81,548). In the first bracket, up to €35,129 ($41,816), national insurance tax is also levied at a rate of 27.65%.
Corporate income tax (CIT)
25%
Value-added tax (VAT) (Belasting Toegevoegde Waarde, BTW)
21%
Social security contributions
- National insurance tax: Contributions are levied on income up to a maximum of €35,129 ($41,816). The contribution is capped at €9,713 ($11,562) per annum.
- Employee insurance contribution: Contributions are levied on income up to a maximum of €58,311 ($69,411). On average the yearly contributions paid by the employer amount to €6,757 ($8,043) for a permanent employment contract and €9,673 ($11,514) for a temporary employment contract.
- Dutch Health Insurance Act: Contribution of approximately €1,498 ($1,783) paid to the health insurance company + 7% on income on income up to €58,311 ($69,411), capped at €4,082 ($4,859), paid by the employer.
Withholding tax (WHT)
- Resident WHT rates: 15% on Dividends, Not applicable on Interests and Royalties
- Non-resident WHT rates: 15% on Dividends, Not applicable on Interests and Royalties
For Interests and Royalties, 25% WHT tax can be applied to affiliated companies in designated low-tax jurisdictions and in certain situations
Capital gains tax (CGT)
- As Corporation: subject to standard Corporate income tax (CIT) rate
- As Individual: 31%. This is for Box 3 (savings and investments). Box 2 (substantial interest) taxed at 26%.
Net wealth/worth tax
The Netherlands have no tax on wealth, but they do have a tax on a fixed return on wealth. The headline effective tax rate is 1.60% on the worth of a person's savings and investments.
Inheritance and Gift tax
An inheritance and gift tax is imposed on the fair market value of the gift or inheritance, less an exempt amount that varies depending on the relationship with the donor. The rate levied on the net gift or inheritance (10% to 40%) also depends on this relationship.
Controlled foreign companies (CFCs)
- Controlled by Corporation: Yes. Target corporate taxpayers that hold a direct or indirect interest of more than 50 per cent in a subsidiary in either a low-taxed jurisdiction (i.e. a statutory CIT rate of less than 9 per cent) or a non-cooperative jurisdiction that is explicitly listed by the Dutch Ministry of Finance.
- Controlled by Individual: Not provided
Disclaimer: This tax summary is for information only and shall not be construed as tax advice. Every situation is different. Should you consider moving to Netherlands, we highly recommend you liaise with a local tax advisor to confirm your future tax regime.
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Year of Assessment
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YA 2021