Taxes in the Netherlands: 2025 Guide to Income Tax, VAT & More

Updated on 17 June 2025

Physical and corporate persons who are employed or perform business activities in the Netherlands need to follow the local requirements for taxation. Paying taxes in the Netherlands is obligatory both for companies established in the country and branches of international entities. Substance has a role in the tax status, a business address in the Netherlands needs to be compliant to the substance requirements by the tax authorities.

How does taxation work in the Netherlands?
The Dutch tax system includes various taxes for individuals and businesses. Income tax is levied progressively in Box 1 (employment income): 9.28% up to €37,149, 36.93% up to €73,031, and 49.5% above that. Other taxes include corporate tax (19% and 25.8%), VAT (21%, 9%, or 0%), wealth tax in Box 3, and social security contributions. Expats may benefit from special schemes like the 30% ruling.

If you own a business, our representatives can provide you with details on the Dutch Tax System local auditing and accounting principles. We can also assist you with registering a company in The Netherlands.

Corporate taxation in the Netherlands

The taxation of corporations in the Netherlands is based on residency. Companies set up locally are considered as legal entities of Dutch residents, a Dutch Resident Company. They owe corporate taxes with respect to their income generated worldwide. Non-resident companies are taxed only with respect to income generated in the country. The rate of corporate taxes is 19% for yearly profits up to EUR 200 000. Income exceeding this amount is taxed at 25.8% percent. The current rates are stable and have not been scheduled for reduction.

The country does not charge withholding taxes on royalties or interest. Dividends are not taxed at the domestic level; otherwise, the tax rate on dividends is 15%. The Netherlands has signed numerous agreements with other states worldwide to avoid double taxation and lower the tax burden on companies.

Other applicable taxes for companies in the Netherlands are the tax for transfer of real estate and VAT (21 percent standard rate and 6%reduced rate). All entities paying VAT in the Netherlands need a registration.

For Dutch companies, the accounting year usually matches the calendar one with 12 months duration. Shorter periods can be considered in the incorporation year. The tax on corporate income is paid annually, up to 5 months after the financial year ends.

The Dutch Tax office or ”Belastingdienst” in Dutch, is the agency in charge of internal revenue and taxation.

Personal taxation in the Netherlands

The Dutch personal income tax system is divided into three categories, known as boxes:

• Box 1 covers income from work and home ownership (such as salary, business income, and pensions). Social security contributions are included in the tax rate for this box.
• Box 2 is for income from a substantial interest (typically 5% or more ownership) in a private company.
• Box 3 applies to income from savings and investments.

Dutch residents are taxed on their worldwide income, while non-residents pay tax only on income generated within the Netherlands. The system is progressive: higher income is taxed at a higher rate.

Every year, individuals must file their income tax return, typically before May 1 of the following year. In addition to income tax, the Dutch Tax Office (Belastingdienst) manages toeslagen (income-related benefits), such as healthcare allowance (zorgtoeslag) and rent allowance (huurtoeslag). These can be applied for via the official portal of the Belastingdienst.

Late filing or non-payment may result in penalties or interest charges.

FAQ's

What are the income tax rates in the Netherlands in 2025?

In 2025, the Netherlands applies a two-bracket system for personal income tax. The rates are:

– 36.97% on annual income up to €75,518
– 49.50% on income above €75,518

These rates apply to residents for Box 1 income (e.g. salary, business profits, and home ownership). Income from savings and investments (Box 3) and substantial interest (Box 2) are taxed separately. The system is progressive, meaning higher income is taxed at a higher rate.

Do expats pay tax in the Netherlands?

Yes, expats who live or work in the Netherlands are generally required to pay Dutch income tax. However, eligible expats can benefit from the 30% ruling, a tax advantage that allows employers to pay up to 30% of an expat's gross salary tax-free. This is intended as compensation for extra costs of living abroad.

To qualify, the expat must have specific expertise that is scarce in the Dutch labor market and must have lived more than 150 kilometers from the Dutch border before employment. As of 2024, the maximum duration of the ruling is five years.

Expats are taxed either as residents (on their worldwide income) or as non-residents (only on Dutch-sourced income), depending on their residency status for tax purposes.

What is VAT in the Netherlands?

VAT (Value Added Tax), or “btw” in Dutch, is a consumption tax levied on goods and services. In the Netherlands, the standard VAT rate is 21%. A reduced rate of 9% applies to essential items such as food, medicine, and books. Some services and exports may qualify for a 0% VAT rate. Businesses must register for VAT, charge it on invoices, and report it to the Dutch tax authorities.

What are the main types of taxes in the Netherlands?

The main types of taxes in the Netherlands include:

– Income tax (inkomstenbelasting): levied on personal income in Box 1, Box 2, and Box 3.
– Corporate income tax (vennootschapsbelasting): applies to profits of companies.
– VAT (btw): charged on goods and services.
– Payroll tax: withheld by employers from employees' wages.
– Capital gains or wealth tax (via Box 2 and Box 3 systems).
– Inheritance and gift tax: levied on transfers of wealth.

Depending on your personal or business situation, you may be liable for one or more of these taxes.