If you live or receive income from the Netherlands then you must follow the taxation laws within the country. Being either a resident taxpayer, meaning that you live in the Netherlands, or a non-resident taxpayer, and you receive income from the country, you are subject to the Dutch income tax.
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Three types of taxable income in the Netherlands
When it comes to the taxation laws in the Netherlands, there are three types of taxable income, classified into so-called boxes. The first box refers to income from employment or home ownership, meaning wages, pension payments, and profits from business activities, periodic benefits or owner-occupied property. The second box speaks of income from a substantial interest, while the third box refers to income from savings and investments.
The Dutch taxation system is far from being simple, as you can expect to be taxed up to 25% of your income, but all the taxes depend on your type of work, residency and other factors. Each person who is subject to taxation according to the taxation laws in the Netherlands must submit their tax return digitally, by April 1 of each year. In some cases, if the deadline cannot be respected, an extension can be requested.
Taxation applied to residents and non-residents of Netherlands
In the tax return form, the Netherlands residents are obligated to declare the income obtained worldwide, including incomes that the Dutch state cannot tax due to national or international regulations. Incomes from employment, profits from business activities or capital in other countries are examples of such revenue. As for non-residents of Netherlands, they can choose if they want to have the same treatment as a resident taxpayer. If one choses to have the resident taxpayer status, then the worldwide income must be declared, allowing the possibility of taxing the same income in a different country. In order to avoid paying taxes in two countries, Netherlands offers a credit against the owned tax, also known as tax relief. An experienced attorney in the Netherlands will be able to council you regarding the best options for your company.
Corporate taxation in Netherlands
Companies in Netherlands, as well as certain entities that are not established in the country but receive income from sources in Netherlands are subject to corporate tax. Companies whose capital consists of shares, co-operative and other legal entities that conduct business are among the types of companies that have to pay taxes. All companies are obligated to fill in a tax return form every year, within five months following the end of the year concerned, and taxes must be paid no later than two months after the receipt of the assessment. Businessmen can calculate the taxes that must be paid in the Netherlands by their companies by using our Dutch tax calculator.
VAT is generally known as a customer tax included in the final price that the end user pays for a certain product or service. According to the EU directives, VAT applies to the supply of goods, rendering of services, acquisition and importation of goods. There are three VAT rates in Netherlands, as follows: 19 percent standard rate, a reduced rate of 6 percent for food, books, newspapers and drugs, and a 0 percent tax for international trading, so that goods can be exported without the VAT cost.
VAT registration in Netherlands is one of the issues investors need to be mindful of, as part of the general tax requirements they need to comply with under law. No minimum registration threshold applies, meaning that all companies, small, medium, and large, will register if they are involved in the supply of goods, or the provision of services (including imports) if these are subject to this type of tax.
The Netherlands has signed numerous double tax agreements with other countries in order to help foreign investors avoid the double taxation. If you need details about the Netherlands double tax treaties concluded so far, our team of lawyers can help you.
Please contact our Dutch lawyers for additional information and personalized consultancy for your business.