In the Netherlands
Payment of tax in the Netherlands is regulated based on mandatory withholding or pre-payments from most sources of income. We have highlighted the most common below.
- Wage: tax is withheld from each salary payment at mandatory rates by the employer. The level of taxation is based on annualized income;
- Pension distributions: tax is withheld from each distribution at mandatory rates by pension administrator. The level of taxation is based on annualized income;
- Social security payments: tax is withheld from each distribution at mandatory rates by pension administrator. The level of taxation is based on annualized income;
- Self-employment income: the tax authorities will require you to make monthly estimated payments depending on your actual annual turnover. The estimated payments are calculated by the Dutch tax authorities;
- Income from your own business: this is considered wage and taxed as described above.
- Profit share: a flat tax rate of 25% applies. Tax is either withheld at the source by the company or paid after the filing of the tax return.
- Dividend payments: most Dutch banks will withhold 15% dividend tax at source from the payment;
- Interest income: Dutch banks will not withhold any tax at the source from interest payments (unless you live in certain European countries);
- Income from investment: a flat tax rate of 30% on your deemed income from investments is generally calculated after filing the tax return. However, if the Dutch tax authorities determine a pattern in the amount of Box 3 you
- need to pay every year, they will require you to make monthly estimated payments.
Due to the mandatory withholding from most common sources of income, most Dutch taxpayers do not need to make any additional payments when filing the tax return.
However, in the case that your self-employment income or income from investments was higher than first estimated there will be additional tax due. This tax will be calculated in the annual income tax return. After filing the tax return, the tax authorities will review the calculation and issue a tax assessment for the additional tax payable.