The Dutch Tax Laws
If you reside in Holland or receive Dutch income, you need to follow the national laws on taxation. As a resident (living in Holland) or non-resident (foreign) taxpayer receiving Dutch income, you will need to pay income tax in Holland.
Taxable Dutch income types
The Dutch tax laws recognize 3 types of income that are subject to tax. These are classified into boxes. Box 1 concerns income related to home ownership or employment, i.e. salaries, business profit, pension, regular benefits and owner-occupied real estate. Box 2 covers substantial interest income and Box 3 represents income from investments and savings.
The taxation system in Holland is quite complex and you can end up paying up to one-fourth of your personal income in taxes, but all rates depend on the nature of the work you perform and your residency, among other factors. Persons taxable in accordance with the Dutch laws need to submit their returns in digital form by the beginning of April each year. If it is impossible to keep this deadline due to particular circumstances, an extension can be granted upon request.
Taxes levied on Dutch residents / non-residents
In the form for tax return Dutch residents are obliged to declare their income received worldwide, including amounts that Holland is unable to tax by virtue of international or national regulations. Employment income, business profits and capital gains obtained in foreign countries fall in the list of such revenues. Non-residents can choose whether to be treated as residents with respect to taxation. Persons with status of resident taxpayers must declare their worldwide income permitting the option of taxation of this income in another country. To avoid double taxation, Holland offers tax relief (or tax credit) against owned tax. An experienced Dutch attorney can advise you with regard to the most convenient possibilities for your business.
Dutch corporate income tax (CIT)
Companies in Holland and particular entities established elsewhere and receiving income from Dutch sources are liable for corporate income tax (CIT). Companies with capital consisting of shares, cooperatives and other entities conducting business are on the list of company types subject to taxation. All companies need to file tax returns every year. The deadline for submission is five months after the concerned year’s end. All taxes need to be paid within two months of the receipt’s assessment.
Value Added Tax is, per se, a consumer tax incorporated in the price paid by the end customer for a particular service or product. In line with the EU legislation, VAT is applicable to the provision of goods, services, importation and acquisition of goods. Holland has three different VAT rates: a standard 21% rate, a special 9% rate for drugs, food, newspapers and books, and a 0% rate for international trade to allow for VAT-exempt export of commodities.
If you need further information and personal advice with regard to your business, please, get in touch with our local lawyers.