In the Netherlands, you pay income tax over your taxable earnings. Taxable earnings are your earnings minus deductibles and fiscal schemes, such as costs made for your company or amortisations. You must file your income tax return with the Dutch Tax and Customs Administration before 1 May of each year.
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Do you have to file an income tax return?
Everyone who receives a declaration letter from the Dutch Tax and Customs Administration has to file an income tax return. If you have not received a letter, but expect to have to pay over €45, or get a refund of over €14, you should also file a tax return.
What if you do not reside in the Netherlands?
If you are registered with the Chamber of Commerce, either as a resident business or a business with a branch in the Netherlands, you will receive a declaration letter to file for income tax. Generally speaking, the rule is that if you receive income from the Netherlands, you are liable to pay income tax, even if you do not reside in the Netherlands. However, if your business is not in the Netherlands, but you have employees working temporarily in the Netherlands, you are normally not liable for paying income tax in the Netherlands. If you are a self-employed professional working on an assignment in the Netherlands, you may have to file an income tax return, depending on several circumstances. Contact the Tax Administration to find out if you have to file or not. If you are a non-resident taxpayer, you are required to file a tax return in the Netherlands if:
- you have received an invitation to file a return
- you have not received an invitation to file a tax return, but you earned income in or from the Netherlands over which you owe more than € 45.
File your tax return online before 1 MayYou have to file your income tax return digitally. You can find the form in the encrypted environment of the website, Mijn Belastingdienst (only in Dutch), from 1 March. File your return before 1 May. You can file your tax return yourself, using tax return or financial administration software, or via a tax intermediary. Either way, you need a DigiD to verify your identity.
Check income tax deductions and fiscal arrangements
You pay income tax over your taxable earnings. That is to say, your income minus deductible items and fiscal allowances, like refurbishment costs made to the office and asset depreciations.
When filing your return, you may make use of several deductibles and fiscal arrangements. This will lower your profit and the amount of income tax you have to pay. The entrepreneur allowance, for instance, consists of a number of such deductibles.
Prinsjesdag (Budget Day) 2019 announcements
On Prinsjesdag (Budget Day) 2019, the Ministry of Finance announced that from 1 January 2020, it will no longer be possible to deduct administrative fines from your income tax or corporate income tax. As an employer, you will no longer be allowed to deduct compensations you give your employees for administrative fines.
The Ministry also announced an increase in general tax credit (arbeidskorting) from 2020 through 2022. The increase means that employees and employers who are liable for income tax, and have an income of between €10,000 and €98,000, will have to pay less income tax. The measure also means that employees who earn between €20,000 and €35,000 will benefit extra if they decide to start working longer hours.
These changes in law will probably come into effect on 1 January 2020, subject to their acceptance by the upper and lower houses of parliament.