How the Dutch Tax System Works

Key Takeaways

The Netherlands uses a three-box system to categorize and tax different types of income separately.
The tax year runs from January 1 to December 31, and you file your return between March 1 and May 1 of the following year.
The Belastingdienst (Dutch Tax Authority) manages all tax collection and filings.
Everyone in the Netherlands receives tax credits that reduce the amount of tax you owe.
Tax rates and rules change every year — always check the rates for the relevant tax year.

Who Needs to Pay Tax in the Netherlands?

If you live in the Netherlands or earn income from Dutch sources, you are likely subject to Dutch taxation. The main situations:

Residents: If you are registered in the Netherlands (BRP registration), you are generally a tax resident and must pay tax on your worldwide income.
Non-residents: If you work in the Netherlands but live abroad, you may still owe Dutch tax on your Dutch-source income.
Partial non-residents: If you have the 30% ruling, you can opt for "partial non-resident taxpayer" status for Box 2 and Box 3.

Good to know

You need a BSN (Burgerservicenummer / Citizen Service Number) and a DigiD (digital identity) to file your tax return online. Get these sorted as soon as you arrive.

The Belastingdienst

The Belastingdienst is the Dutch Tax and Customs Administration. They handle:

Income tax (inkomstenbelasting)
Corporate tax (vennootschapsbelasting)
VAT (BTW — Belasting over de Toegevoegde Waarde)
Payroll tax (loonbelasting)
Import duties and excise

You interact with the Belastingdienst primarily through their online portal at belastingdienst.nl. You log in with your DigiD.

The Three-Box System

The Netherlands divides taxable income into three separate "boxes," each taxed differently:

Box	What It Covers	How It's Taxed
Box 1	Employment income, business profits, home ownership	Progressive rates (36.97% – 49.50% in 2026)
Box 2	Substantial interest in a company (5%+ ownership)	Flat rates (24.5% up to €67,000, then 33%)
Box 3	Savings, investments, and other assets	Flat 36% on a fictitious (assumed) return

Each box is calculated independently. You cannot offset a loss in one box against income in another (with very limited exceptions).

Tip

For a detailed visual explanation of how the three boxes work, read our dedicated guide: The Three-Box System Explained.

Tax Brackets and Rates (2026)

Box 1: Income from Work and Home

In 2026, Box 1 has two brackets:

Taxable Income	Rate
€0 – €38,441	36.97%
€38,441+	49.50%

These rates include both income tax and social security contributions (volksverzekeringen).

Tax Credits

Everyone who earns income in the Netherlands receives tax credits (heffingskortingen) that directly reduce the amount of tax you owe:

Algemene heffingskorting (General tax credit): Up to €3,362 in 2026. Phases out as income increases above €24,813.
Arbeidskorting (Labour tax credit): Up to €5,532 in 2026. Rewards people who work.

These credits mean that lower incomes are effectively taxed at a much lower rate than the headline bracket rates suggest.

The Tax Year and Filing

The Dutch tax year is the calendar year (January 1 – December 31).
Tax returns for the previous year open on March 1 and are due by May 1.
You can request an extension until September 1 (or later with a tax advisor).
The Belastingdienst pre-fills much of your return with data from your employer, bank, and other sources.

Warning

Even if you do not receive an invitation to file (the famous "blue envelope"), you may still be required to file a return. This is especially important if you have income from multiple sources, own a home, or have foreign assets.

Payroll Tax vs. Income Tax

If you are employed in the Netherlands, your employer withholds payroll tax (loonbelasting) from your salary every month. This is an advance payment of your income tax.

When you file your annual tax return, the Belastingdienst calculates your actual tax owed and credits the payroll tax already paid. This usually results in either:

A refund (teruggave) — you overpaid during the year
An additional assessment (aanslag) — you owe more than was withheld

Common Tax Benefits

The Netherlands offers several tax benefits that can significantly reduce your tax burden:

30% ruling — Highly skilled migrants can receive up to 30% of their salary tax-free
Mortgage interest deduction — Interest on your primary home mortgage is deductible in Box 1
Self-employment deductions — ZZP/freelancers get the zelfstandigenaftrek and MKB-winstvrijstelling
Pension contributions — Deductible from your taxable income
Charitable donations — Deductible if they exceed a threshold