Netherlands (Holland) - Tax Guide for Freelance Contractors

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.

Taxable income:

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,
• Box 3:  includes income from savings and investments.

Certain deductions are permissible from Box 1 income for 2009 including:

• a general tax credit of EUR 2’007,
• all employees can claim an employment tax credit of EUR 1’504,
• mortgage interest for primary residence,
• premiums for certain life insurances,
• alimony payments,
• extraordinary medical expenses,
• support for direct relatives,
• gifts if certain thresholds are exceeded,
• moving allowance under certain conditions,
• other tax credits for children, single parents and senior citizens are also available.

Tax rates for Box 1 income for 2009:

• 33.50% on income up to EUR 17’878,
• 42.00% from EUR 17’878 up to EUR 32’127,
• 42.00% from EUR 32’127 up to EUR 54’776,
• 52.00% on income over EUR 54’776.

  The rates for the first two brackets include national social security premiums.