Social security contributions
Employee insurance contributions and national insurance tax are levied on residents and non-residents under a number of different regulations.
National insurance tax
Under the national insurance tax regulations, contributions are levied on income up to a maximum of EUR 35,472. At present, the contribution is capped at EUR 9,808 per annum. From this amount several levy rebates may be deducted. National insurance contributions paid by an employee are not deductible from taxable income. National insurance contributions and income taxes are included as a single tax in the first income tax bracket.
Employee insurance contribution
Under the employee insurance regulations, contributions are to be paid on income up to a maximum of EUR 59,706. The contribution rate depends on the employer’s industry, but on average the yearly contributions to be fully paid by the employer amount to EUR 7,027 for an employee with a permanent employment contract and EUR 10,012 for an employee with a temporary employment contract.
Dutch Health Insurance Act
It is compulsory for all residents of the Netherlands and all employees who are subject to Dutch wage tax to be covered under the Dutch Health Insurance Act (Zorgverzekeringswet) and to have a statutory health insurance policy. For employees the contribution will consist of:
a nominal contribution of approximately EUR 1,522 (including EUR 385 own-risk), to be paid to the health insurance company, and
an income-related contribution (6.7% on income up to a maximum of EUR 59,706, with a maximum of EUR 4,200), to be paid to the Dutch tax authorities by the employer.
Value-added tax (VAT), known in Dutch as Omzetbelasting or BTW, is payable on sales of goods and on services rendered in the Netherlands as well as on the importation of goods and on the ‘intra-European’ acquisition of goods. There are three VAT rates: 21%, 9%, and 0%. As of 2019, the reduced rate for prime necessities is increased from 6% to 9%.
The main VAT rate is 21%.
The reduced 9% VAT rate is applicable on certain prime necessities (and also on certain energy-saving insulation activities on houses).
The special 0% VAT rate is applicable mainly to intra-EU supplies, exports, imports stored in bonded warehouses, services rendered in connection with the above, and certain other services.
The following are exempt from VAT:
- The supply of immovable property two years after putting it into use and lease. However, if the lessee’s use of the immovable property is 90% or more for input VAT-deductible purposes, the lessor and lessee may opt to be subject to VAT on rent, in which case the lessor may deduct the VAT charged in respect of the property.
- Medical, cultural, social, and educational services.
- Services provided by banks and other financial institutions in connection with payment transactions and the granting of credit facilities.
- Insurance transactions.
- Transactions in shares.
Net wealth/worth taxes
In the Netherlands, wealth tax does not exist as such. The actual investment income received is not taxed. However, as part of the income tax system, the deemed income from the investment portfolio (e.g. bank accounts, shares) is taxed at the box 3 tax legislation, i.e. three ascending fixed rates of return, taxed at a rate of 31% based on the 1 January position/value of each year. Non-resident taxpayers and partial non-resident taxpayers are only taxed on a limited number of sources.
Please note that changes to the box 3 regime are expected in the coming years.
Inheritance, estate, and gift taxes
An inheritance and gift tax is imposed on the fair market value of the gift or inheritance, less an exempt amount that varies depending on the relationship with the donor. The rate levied on the net gift or inheritance (10% to 40%) also depends on this relationship. The tax is due if:
- the gift or inheritance is received from a resident of the Netherlands
- the gift or inheritance is received from a former resident of the Netherlands who is a Dutch national, within ten years of their departure from the Netherlands, or
- the gift is received from a former resident of the Netherlands within one year after their departure from the Netherlands.
A municipal tax applies to the ownership of immovable property. The circumstances at 1 January of a given year are decisive. The tax is payable upon an annual assessment that is based on the value of the property (as determined by the municipality). Non-residents and residents are subject to municipal tax applicable to the ownership of immovable property.
Luxury and excise taxes
An excise tax is levied on certain consumer goods (e.g. cigarettes, cigars, mineral oils, alcoholic products).
The transfer of immovable property or certain rights thereto (e.g. buildings, houses, shares in real estate companies) is subject to 2% transfer tax, payable by the new owner. The 2% transfer tax applies equally to residents and non-residents. As of 2021, young first-time buyers on the housing market are eligible for a transfer tax exemption. Someone will qualify as a first-time buyer if they are 18 years old or older but under the age of 35 when they purchase their first property. The first-time buyer can only use the exemption once. From 1 April 2021, a maximum housing value limit of EUR 400,000 will apply, which will be indexed annually. This limit applies to the entire dwelling and not to the value of the part of the dwelling acquired. Only starters who buy a house under EUR 400,000 will receive the exemption, while starters who buy a more expensive house will pay 2% transfer tax on the entire amount of the house, just like other house buyers.
Buyers who don't plan to live in their home (investors) have to pay transfer tax of 8%. There are plans to increase this to 9%.
An insurance tax of 21% is payable on insurance premiums if the insured is a resident of the Netherlands or if the insured object is in the Netherlands. Several exemptions apply; ships and aircraft operated in international traffic, for example, are exempt from the insurance premium tax. In certain situations, an insurer outside the EU may be required to take on a tax representative in the Netherlands.
An individual who owns/uses a car in the Netherlands may become liable to Dutch road tax. The individual who owns the car at the start date of each quarter will be liable to road tax. The amount due depends on the weight of the car and the type of fuel it uses.