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
- Tax revision 2021: high tax in box 3 possible
- Corporate tax 2020, 2021 decreases. Rate box 2 increases