The Netherlands is known for its dynamic economy and friendly environment for entrepreneurs. It has quite a complex and modern tax system. Understanding its mechanisms is key for anyone planning to do business here. What do taxes in the Netherlands look like? Below we present the most important information about taxation in this country.
Table of Contents
- Taxes in the Netherlands – Personal Income Tax (PIT)
- Taxation of Capital Gains, Dividends, And Investments for Individuals in the Netherlands
- Taxes in the Netherlands – Tax Residency for Individuals
- Taxes in the Netherlands – Corporate Income Tax (CIT)
- Taxation of Capital Gains, Dividends, and Corporate Investment Income in the Netherlands
- Taxes in the Netherlands – Value Added Tax (VAT)
- Taxes in the Netherlands – Summary
- FAQ – Taxes in the Netherlands
Taxes in the Netherlands – Personal Income Tax (PIT)
PIT in the Netherlands is based on three categories of income, called “boxes”. Each of them is taxed according to separate rules and rates. The total income is the sum of income from all categories.
| Box 1. | Income from Employment and Residence | Scope: Includes salaries, income from business activities and the value of the property owned. |
| Tax rates in 2025: – up to 38.441 EUR: 35.82%, – from 38.441 EUR to 76.817 EUR: 37.48%, – above 76.817 EUR : 49.50%. | ||
| Box 2. | Income from Significant Shareholdings in Companies | Scope: Applies to holders of at least 5% of the company’s shares. |
| Tax rates: – up to 67,000 EUR: 24.5%, – over 67,000 EUR: 31%. | ||
| Box 3. | Income from Savings and Investments | Scope: Includes savings, investments, and real estate not used as a primary residence. |
| Tax rate: a fixed rate of 36%. |
What is important, the Netherlands applies progressive taxation within Box 1. This means higher rates for individuals with higher incomes. On the other hand, in Boxes 2 and 3, the tax system is simplified. It relies on specific percentage rates for different categories of assets. This division allows for flexible management of tax liabilities depending on the sources of income.
Taxation of Capital Gains, Dividends, And Investments for Individuals in the Netherlands
In the Netherlands, capital gains are not subject to separate taxation unless they are related to business activities, lucrative investments, or significant shareholdings.
| Box 1 | Income from “lucrative” investments is taxed as “income from other activities”. The tax rate is progressive and it amounts up to 49.50%. |
| Box 2 | Profits from the sale of significant shareholdings (at least 5% of a company) are taxed within Box 2. The rate is up to 33% (in 2024). |
| Box 3 | Capital gains from savings and investments are taxed based on assigned income. A flat investment return rate applies (36% in 2024). |
In the Netherlands, dividends are classified as investment income for tax purposes. They are subject to designated taxation. A 15% withholding tax applies to dividends. For residents, this tax is credited against their income tax liability. For non-residents, it may be the final tax burden unless a double taxation treaty applies.
Investment taxation varies by asset type. Savings and interest are taxed in Box 3 based on an assigned return on investment at a 36% rate.
Taxes in the Netherlands – Tax Residency for Individuals
Dutch tax laws determine tax residency based on an analysis of relevant circumstances. In case of doubt, tax courts decide on residency status. They focus on an individual’s permanent personal and professional ties to the Netherlands.
Key criteria for determining tax residency include:
- permanent residence – ownership and use of residential property in the Netherlands,
- location of the workplace – performing professional duties in the Netherlands,
- the family’s place of residence – important in the case of people with a spouse and children,
- registration in Dutch authorities – registration in the local administrative authorities,
- holding financial assets – e.g. Dutch bank accounts, investments, real estate,
- length of stay in the Netherlands – permanent or long-term residence in the country.
Non-residents can apply for qualifying non-resident status, which provides access to tax benefits.
Previously, expats could choose partial non-resident status. This meant they were taxed as residents on employment income but as non-residents on capital gains and investments. Due to tax reforms, this option will be abolished in 2025. A transition period till the end of 2026 applies for those who opted in before 2024.
The Netherlands follows a global taxation system. Residents pay tax on worldwide income, regardless of where it is earned. Non-residents pay tax only on income from specific sources in the Netherlands. This includes salaries, business profits, director’s fees, and income from Dutch real estate.
Taxes in the Netherlands – Corporate Income Tax (CIT)
Dutch resident companies are subject to CIT on their global income. Some types of income may be exempt or excluded from taxation. Foreign entities have a limited tax obligation. They pay tax only on income earned in the Netherlands.
The standard CIT rate is 25.8%. A lower rate of 19% applies to income up to 200 000 EUR. Companies in innovation sectors can benefit from a reduced 9% rate if at least 30% of their income comes from intangible assets.
The Netherlands offers various tax incentives and deductions for companies focused on innovation and patents. This makes the country an attractive location for businesses developing intellectual property.
Key tax benefits include:
- Participation exemption. Dividend and capital gains income may be tax-exempt if specific conditions are met.
- Innovation box. A reduced CIT rate applies to income from qualifying intellectual property rights.
Taxation of Capital Gains, Dividends, and Corporate Investment Income in the Netherlands
Dutch tax laws offer a wide range of regulations regarding the taxation of capital gains, dividends, and investment income. They are relevant for both local and international companies.
Dividends and capital gains from Dutch companies may qualify for the participation exemption. This includes cash and stock dividends, bonus shares, hidden profit distributions, and capital gains related to these shares.
The participation exemption applies to shares with at least 5% of the subsidiary’s capital. These shares must not be treated as portfolio investments. They must also meet the criteria of the tax test or asset test.
Income from interest and license fees is taxed as regular income at the standard CIT rate.
Taxes in the Netherlands – Value Added Tax (VAT)
Currently, there are three VAT rates in the Netherlands.
| VAT 21% | The standard VAT rate in the Netherlands. It is applied to all goods and services that are not subject to the reduced 9% VAT rate or exempt from VAT. |
| VAT 9% | The only reduced VAT rate. |
| VAT 0% | Zero VAT rate. |
The reduced VAT rate in the Netherlands is 9%. It applies to products and services such as food and non-alcoholic beverages, catering and restaurant services (excluding alcohol), agricultural products, pharmaceuticals, medical and therapeutic devices, prosthetics and other health-related accessories, newspapers, books, textbooks, as well as audiobooks and e-books.
The 0% VAT rate is applied, e.g., to the installation of solar panels on private and public buildings.
Taxes in the Netherlands – Summary
The Dutch tax system, although complex, offers numerous business opportunities. With competitive tax rates, tax reliefs and transparent procedures, the Netherlands remains an attractive place to do business.
If you are planning to set up a company in the Netherlands, our experts will help you with the registration. We will also advise you on tax issues. Contact us today!
FAQ – Taxes in the Netherlands
What are the basic principles of personal taxation in the Netherlands?
The Dutch tax system divides income into three categories (boxes). Box 1 – income from work and residence. Box 2 – income from shares in companies. Box 3 -income from investments and savings. Each category is taxed with different rules and rates.
What are the personal income tax rates in the Netherlands for 2025 on income from work and residence?
In 2025, box 1 tax rates range from 35.82% to 49.50%, depending on income levels.
Is there a tax-free amount in the Netherlands?
There is no traditional tax-free amount. Yet, there are tax credits and a progressive rate system that reduce the tax burden for individuals with lower incomes.
How is tax residency determined in the Netherlands?
Tax residency depends on factors like permanent residence, job location, financial assets, and length of stay. Residents are taxed on global income. Non-residents are taxed only on income from the Netherlands.
What is the withholding tax on dividends in the Netherlands?
The Netherlands imposes a 15% withholding tax on dividends paid by companies. For residents, this is credited against their tax obligations. Non-residents may benefit from reduced rates under double taxation treaties.
How are capital gains taxed in the Netherlands?
Capital gains are not separately taxed unless they arise from business activities or the sale of significant shares in companies.
Are there special tax reliefs for expats in the Netherlands?
Yes, expats could use a partial exemption. However, this mechanism will be abolished in 2025. Still, there is a transition period until 2026 for those who started using it before 2024.
What are the VAT rates in the Netherlands?
The Netherlands has three VAT rates:
21% (standard),
9% (reduced for food, books, medicine),
and 0% (mainly for exports and international services).
Can non-residents benefit from tax reliefs in the Netherlands?
Yes, qualifying non-residents can access tax reliefs available to residents if at least 90% of their income is taxed in the Netherlands and they live in the EU, EEA, or Switzerland.
What are the tax obligations for individuals in the Netherlands?
Individuals must file an annual tax return with the Dutch tax office (Belastingdienst). The deadline is typically 30th April of the year after the tax year. Business owners may also need to file VAT returns quarterly and make income tax prepayments.
