Dutch wage tax is a mandatory pre-payment of the income tax that you are expected to owe for Box 1 purposes. However, the wage tax does not account for the allowed Box 1 deductions.
Dutch wage tax is withheld directly from your taxable salary. So your employer will withhold the wage tax due directly from your salary payment and transfer this directly to the Dutch tax authorities on your behalf. Your employer is obligated to withhold the tax and make monthly transfer of the wage tax due to the Dutch tax authorities. Failure to do so will result in penalties for your employer.
The tax rates used and tax credits applied are the same as in the Dutch income tax. In the absence of any deductions or any other income, the Dutch wage tax that was withheld from your salary should be equal to the amount of Dutch income tax that you have to pay for the year.
The Dutch wage tax system is different from U.S. payroll tax system. As indicated, withholding of wage tax is compulsory for Dutch employers and is the employer's responsibility. In addition, you are not able to apply deductions to the level of wage tax withholding similar to the points system in the U.S.A.
OnestopTaxPrep has over 18 years of specialization in providing combined Dutch and U.S. tax preparation and consulting services. This specialization has assisted U.S. nationals living and / or working in The Netherlands and Dutch nationals living in the U.S.A.