๐Ÿ‡ณ๐Ÿ‡ฑ Netherlands

Europe
2 residency programs
Residence-based taxation
Amsterdam, Netherlands

Countries / Netherlands

The Netherlands (Dutch: Nederland), often incorrectly termed Holland, is a country in Northwestern Europe with some overseas territories in the Caribbean. In Europe, it consists of 12 provinces that border Germany to the east, Belgium to the south, and the North Sea to the northwest, with maritime borders in the North Sea with those countries and the United Kingdom.

Together with the Caribbean Netherlands โ€”Bonaire, Sint Eustatius and Sabaโ€”it forms a constituent country of the Kingdom of the Netherlands. The official language is Dutch and a secondary official language in the province of Friesland is West Frisian. In the north and east of the country, Low Saxon is also spoken, and in the southeast, Limburgish. In the Caribbean Netherlands English and Papiamento are recognised languages.

The Netherlands has a developed economy and has been playing a special role in the European economy for many centuries. Since the 16th century, shipping, fishing, agriculture, trade, and banking have been leading sectors of the Dutch economy. The Netherlands has a high level of economic freedom. The Netherlands is one of the top countries in the Global Enabling Trade Report (2nd in 2016), and was ranked the fifth most competitive economy in the world by the Swiss International Institute for Management Development in 2017. In addition, the country was ranked the second most innovative nation in the world in the 2018 Global Innovation Index.

Known for

Fact Sheet

Continent

Europe

Demonym

Dutch

Calling code

+31

Driving side

Right

Motto

I will uphold (Je maintiendrai)
Population
17,181,084
Human development index
0.93
Life expectancy
82 years
Gini index
25.40
Unemployment rate
4%
Inflation rate
0.6%
Fertility rate
1.7

Cost of Life

Cost of Living Index
73.75
Rent Index
35.18
Groceries Index
55.87
Restaurant Price Index
80.48
Local Purchasing Power Index
90.73

Residency Programs (2)

Taxation overview

Tax system

Residence-based taxation

Countries with a residence-based taxation levy tax from your worldwide income for as long as you're a tax resident of that country. This is the most common taxation system.

Tax residence definition varies from country to country. General rule is you're a tax resident of a country if you spend 183 days or more in it in a year.

Tax rates

Personal Income tax (Box 1)

Progressive tax up to 49.5% above 68,507 EUR (73,560 USD).

From:

  • Worldwide income, if resident
Income from substantial interest tax (Box 2)

Flat tax of 25%.

From:

  • Worldwide dividends, if resident
  • Dutch dividends, if non-resident
What is substantial interest?

A Dutch resident who, alone or together with a spouse or other close relatives, holds at least 5% of the shares or a class of shares of a company or who holds rights to acquire a 5% interest in a company has a so-called substantial interest (in Dutch: โ€œaanmerkelijk belangโ€). The benefits derived from this substantial interest are taxable in box 2. These benefits include dividends and the gain on the sale of one or more of the shares or rights. For non-resident taxpayers, taxation in box 2 will only apply to a non-resident who holds a substantial interest in a Dutch-based company.

The taxable income for substantial shareholders includes the regular income derived from the substantial shareholding (like dividends) reduced with allocable costs, and the income (capital gains) realized with the alienation of shares belonging to the substantial shareholding. This income can be reduced with the personal allowances.

Savings and Investment Tax (Box 3)

Flat tax of 30%.

From:

  • Worldwide interests, if resident
  • Dutch savings, if resident or non-resident

Income from savings and investments is, as such, not taxable. However, the net assets (assets minus debts) valued on 1 January of an individual are deemed to generate an annual fixed return on investment. This fixed return is taxed in box 3 at a flat rate of 30%. All net assets that are not intended for daily use and that are not taxed in box 1 or box 2 belong to the box 3 taxable base. For residents and non-residents, part of the taxable base is exempt and several specific deductions can be applicable.

The notional return on box 3 assets is calculated on the basis of three ascending fixed percentages. These percentages have been determined on the basis of relevant market information and investment results and will be reassessed periodically.

For 2020, the following fixed return percentages are applicable (applied as progressive brackets):

  • 1.80% on assets with a total value of 30,846 EUR (33,121 USD) to 103,643 EUR (111,287 USD).
  • 4.22% on assets with a total value of 103,643 EUR (111,287 USD) to EUR 1,036,418 EUR (1,112,859 USD).
  • 5.33% on assets with a total value exceeding 1,036,418 EUR (1,112,859 USD).

Non-residents are subject to taxation only on the net value of a limited number of Dutch assets, including the following:

  • Dutch real estate not used as the primary residence.
  • Profits rights unrelated to shares or an employment.

Rates Year of Assessment

YA 2020

Tax Treaties (92)

Netherlands has concluded 92 tax treaties (also called double tax agreements, or DTAs) with other countries to avoid or mitigate double taxation. Such treaties may cover a range of taxes including income taxes, inheritance taxes, value added taxes, or other taxes.
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