Taxes in the Netherlands are high

Paying taxes in the Netherlands in 2020? Most Dutch people will experience taxes and especially income tax in our country as high, despite some rate reductions. But the rate reductions will not be reflected in sales tax and all kinds of other taxes and levies that must be paid in 2020. What and to whom do you have to pay tax in the Netherlands?

Paying taxes in the Netherlands in 2020

  • Taxes in the Netherlands
  • National income in 2020: taxes
  • Direct taxes and indirect taxes
  • Municipal taxes
  • VAT international
  • How much inheritance tax do you have to pay?
  • The income tax
  • Key lock

Taxes in the Netherlands

Spread out over all workers, a Dutch person pays an average of a quarter of his salary in payroll tax and social security contributions. And everyone knows that we certainly haven’t had it yet. If you really want to know what you have to spend, many levies must first be removed. The biggest cash cow is VAT. This stands at 9%, low rate, and 21%, high rate.

National income in 2020: taxes

The Ministry of Finance’s Budget Memorandum always provides the expected tax revenues of the government. For 2020 , this is broken down into a few major items as follows:

Expected National Taxes in 2020

billions of euros

Wage and income tax including national insurance contributions

105.1

Corporation tax

26.2

Excise duties

12.4

Transfer tax and insurance tax

6

Environment

4.5

Motor vehicles

4.4

Gift and inheritance tax, landlord levy

3.5

Dividend tax

5.2

VAT (sales tax)

60.5

Other

6.4

Total

235.5

The wage and income tax that we see when we receive our pay slip is therefore only a 50% fraction of the total national taxes. The rest goes to other government taxes, most of which goes to VAT, which has been increased to 21%. And the national insurance premium, which raises 41.7 billion euros. Finally, there are the other authorities that are ready with taxes and levies (municipalities, water boards, provinces).

Direct taxes and indirect taxes

Direct taxes include:

  • Wage and income tax.
  • Dividend tax.
  • Gaming tax.
  • Corporation tax.
  • Gift and inheritance tax.

Indirect taxes are:

  • Import duties.
  • Sales tax.
  • Tax on passenger cars and motorcycles.
  • Excise duties.
  • Transfer tax.
  • Insurance tax.
  • Motor vehicle tax.
  • Taxes on an environmental basis.
  • Consumption tax on non-alcoholic drinks and others.
  • Tax on heavy motor vehicles.
  • Bank tax.

Paying taxes in the Netherlands, 2020, billions of euros

 

2019

2020

direct taxes

138.5

138.7

indirect taxes

94.5

96.8

total taxes

233

235.5

______________________________ Source: Budget Memorandum 2020

Municipal taxes

Of course, you are not there yet with those government taxes. Municipalities and water boards also systematically lack money:

  • You can always object to property tax.
  • Sewer law.
  • Cleaning levy.
  • The water board cover of the water boards.
  • The pollution levy from the water boards.

The municipalities are expected to raise 9 billion euros, of which approximately 6 billion through the WOZ, the real estate tax. A major increase is the sewerage tax. The water boards’ levies are also expected to rise further.

VAT international

With its high VAT rate of 21%, the Netherlands is not a leader within the EU:

The VAT rates in the EU countries, 2020

Country

Normal rate

Reduced rate

Austria

20%

10% or 13%

Belgium

21%

6% or 12%

Bulgaria

20%

9%

Cyprus

19%

5% or 9%

Czech Republic

21%

10% or 15%

Germany

16%

5%

Denmark

25%

Estonia

20%

9%

Greece

24%

6% or 13%

Spain

21%

10%

Finland

24%

10% or 14%

France

20%

5.5% or 10%

Croatia

25%

5% or 13%

Hungary

27%

5% or 18%

Ireland

23%

9% or 13.5%

Italy

22%

5% or 10%

Lithuania

21%

5% or 9%

Luxembourg

17%

8%

Latvia

21%

12% or 5%

Malta

18%

5% or 7%

The Netherlands

21%

9%

Poland

23%

5% or 8%

Portugal

23%

6% or 13%

Romania

19%

5% or 9%

Sweden

25%

6% or 12%

Slovenia

22%

9.5%

Slovakia

20%

10%

United Kingdom

20%

5%

How much inheritance tax do you have to pay?

The tax on inheritances in the Netherlands is high. The tax on inheritance and inheritance generates a lot of money for the tax authorities.

The income tax

In 2020, the Netherlands switched to a two-tier system with adjusted rates. The rates are going down for many people, but at the same time less tax deduction is possible:

Income tax rates 2019 and 2020

year

income up to 20,711

several to 34,712

several to 68,507

more than 68,507

2019

18.75%

20.20%

38.10%

51.75%

2020

19.45%

19.45%

37.35%

49.50%

Key lock

We are often tempted to look at our pay slip and the high excise duties when refueling. As you probably suspected, a lot, and in some cases more, is also spent on VAT and other levies. And so the tax and tax burden will increase on balance. It is very likely that taxes will shift further from direct taxes to indirect taxes and municipal levies in the coming years. A plus on your pay slip no longer necessarily means that your purchasing power will improve.

read more

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