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Did you find a blue letter on your doormat, telling you it’s time to file your income tax returns for the Netherlands? Have you just moved to the Netherlands and are you curious how the tax system works here? No worries, taxes might sound complicated, but they’re usually not. In this post, we’ll tell you everything you need to know about income tax in the Netherlands and answer the following questions:

What is the Dutch income tax return?
Do I have to pay income tax in the Netherlands?
How does income tax in the Netherlands work?
What are the deadlines for income tax return in the Netherlands?
What documents do I need to file the tax return?
Which tax credits (Loonheffingskorting) are there?
Which contributions to Social and Healthcare Insurance Act do I have to pay?

What is the Dutch income tax return?

At the beginning of each year, in the Netherlands you have to file your income tax return, declaring your income, assets and deductions. If you have a Dutch income and lived in the Netherlands throughout the whole year, you can submit your tax return online. Usually, you’ll receive a reminder from the Belastingdienst (the blue letter!) when it’s time to file your income tax return. You’ll log into your MijnBelastindienst-Account with your DigiD and fill in the forms that are waiting there for you. Typically, a lot of data is prefilled, like the salary you received or the heffingskorting etc. If you have the correct data at hand and your financial situation is not too complicated (e.g. you’re not a house owner, didn’t make any investments etc.), filing income tax returns in the Netherlands is pretty straightforward and doesn’t take up too much time. The downside of the digital forms is, they are only available in Dutch.

If you haven’t lived in the Netherlands throughout the whole year, but started earning withing your first Dutch year, you have to fill in the dreaded M Form (Migration income tax return form). The M Form is a 60 pages long book”let”, which can not be submitted online.

However, no reason to panic, we created the M-form Manual with which you’ll have filled in your M-form in no time.

Do I have to pay income tax in the Netherlands?

Simply put, as soon as you earn a Dutch salary, you have to pay taxes in the Netherlands. However, usually, the Dutch tax authority (Belastingdienst) tells you whether you must file your tax return. As soon as you receive a declaration letter (aangiftebrief) from the Belastingdienst, you are obligated to file your tax return for the Netherlands and pay the taxes that result from the calculations. But no worries, as already mentioned, in many cases you receive some money back after filing your tax return. Hence, it might be worthwhile to proactively check whether you can file your tax return in the Netherlands even though you didn’t receive a letter from the Belastingdienst. However, in our experience, this case is scarce.

How does income tax in the Netherlands work?

In the Netherlands, payroll tax is withheld from your salary each month. Meaning that the income tax in the Netherlanfs is deducted automatically from your pay, and you’ll never actually see the money on your bank account. However, the amount that is withheld is always determined in advance and can change over the year. Also, most tax deductions are not taken into account in the preliminary calculation, which is why there is a chance that you get some money back after the final calculation is made. Therefore, you need to declare the exact numbers at the beginning of each year with your income tax return.

What are the deadlines for income tax return in the Netherlands?

In the Netherlands, the fiscal year runs from 1 January to 31 December. You always file your income tax returns for the previous year. Hence, in the beginning of 2020 you file for 2019’s taxes. The deadline for submitting the forms is 1 May unless you request an extension. You can do this by contacting the Belastingdienst (click on Uitstel aanvragen). However, in many cases, you’ll receive some money back, so why procrastinate?

You’ll be able to submit the tax return from 1st of March, that leaves you a window of two months. If you submit your tax declaration before the 1st April, you’ll receive a message not later than 1st July about whether you’ll get some money back or not. Make sure you meet the deadlines as otherwise, you’ll have to pay a fine.

What documents do I need to file the tax return?

Having all the necessary data at hand before filing your tax return makes the whole process much more manageable. Make sure you’ve applied for your DigiD in time and have it ready as well as your BSN. Furthermore, you’ll need all salary data from the previous year (an annual statement or payslips) as well as the annual statements of your bank account(s).

Here’s a detailed list of all data you possibly need for your tax return. It also includes significant health costs, records over received or paid alimentation, all relevant documents if you’re a house owner as well as records over debts, loans and benefits.

If you are married or in a registered partnership, you’ll be filing the tax return together with your partner. Make sure you have both of your data ready.

Which tax credits (Loonheffingskorting) are there?

If you receive a Dutch salary, you are entitled to certain tax credits on your income tax in the Netherlands. Everyone working in the Netherlands is entitled to the general tax credit (Algemene heffingskorting). If you receive a Dutch salary or profit from a Dutch company or other activities, you are also entitled to employed person’s tax credit (Arbeidskorting). If you are regularly employed these tax credits are directly deducted from your monthly salary. Your employer or paying institution usually arranges this for you, and you don’t have to apply for it separately. Usually, you need to fill in a respective form as soon as you start at the new employer.

Do you have multiple employers? Or do you receive other benefits? Only apply the tax credit to the employer where you earn the most. Otherwise, you risk receiving too much Loonheffingskorting, which you’ll have to pay back afterwards.

Which contributions to Social and Healthcare Insurance Act do I have to pay?

If you work in the Netherlands or work for a Dutch employer, you are obliged to contribute to the social and healthcare insurance act. For the social insurances, you contribute to the AOW, Anw and Wlz, which cover benefits for persons who are unable to work. Next to the social insurances, you pay an income-related contribution to the healthcare system in the Netherlands (=Bijdrage Zorgverzekeringswet). Your employer is withholding a certain amount of your monthly income for the taxes ( = Loonheffing) and thereby also takes into account the contributions for social and healthcare insurance act. If you work as a freelancer, you need to pay the contributions as soon as you file your annual income tax return.

It is possible that your employer withheld too much insurance contribution throughout the year and it is not until you filed your income tax declaration that the definite amount is determined. Therefore, it is possible that you’ll get some money back after filing your income tax return in the Netherlands or worse case that you’ll have to pay extra.

Last updated: 15 April 2020. Please let us know if you find any discrepancies.