Netherlands (Holland) - Tax Guide for Freelance Contractors
Welcome to our guide to Dutch Taxation. You will find a wealth of information which will be useful if you plan to work in, or place consultants in, The Netherlands.
Our tax guides give a general overview of the actual taxation rates and rules at the time of writing. There are of course many ways to legally reduce tax or social security burdens in The Netherlands. Please contact us for more information or an actual breakdown of your situation, and to find out more about our range of payroll and contact management services in The Netherlands.
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Dutch Income Tax
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Tax residents in the Netherlands: are liable for income tax in the Netherlands on their worldwide income;
Non tax residents in the Netherlands: are liable on their Dutch-source income only.
Residence is determined not by law but according to the following circumstances:
- the availability of a permanent home,
- the place where the spouse and the children live and,
- the centre of personal and economic relations.
A couple (married or unmarried) living together for the majority of the year may file a joint return.
Income tax is levied on three categories (boxes) of income:
- Box 1: includes employment income, business profits and income from home ownership
- Box 2: includes income from a substantial shareholding taxed at 25%
- Box 3: includes income from savings and investments taxed at 30%
Certain deductions are permissible from Box 1 income for 2012 including:
- costs for commuting by public transport
- alimony payments
- extraordinary medical expenses
- support for direct relatives
- life course scheme contributions
- other tax credits for children, single parents and senior citizens are also available
If certain conditions are met, a foreign employee working in the Netherlands may be granted the so-called 30% ruling. Under this ruling a tax free reimbursement amounting to 30% of the income from active employement can be paid to the employee
- Tax rates for Box 1 income for 2012:
- 33.45% on income up to EUR 18’945
- 41.95% from EUR 18’945 up to EUR 33’863
- 42.00% from EUR 33’863 up to EUR 56’491
- 52.00% on income over EUR 56’491
The rates for the first two brackets include national social security premiums.