Taxation in Netherlands is a system controlled by the Ministry of Finance, Netherlands. Being an unit of the Ministry of Finance, the Tax Administration in Netherlands is responsible for levying tax .
Types of Taxes in Netherlands
Some of major taxes in Netherlands include:
- Income Tax
- Wage withholding tax
- Corporate income tax
- Value Added Tax (VAT)
- Environmental Taxes
The government of Netherlands has a liberal tax rate.
- Income Tax: Any income holder (mainly service holder) in Netherlands needs to pay income tax. Income tax in Netherlands is categorized into the class of three boxes (the name of tax category). Each of the boxes has a different tax rate. The total income tax payable will be the aggregate of taxes in all three boxes.
- Corporate income tax: Any company that earns profit, needs to pay corporate income tax to the government of Netherlands. The payable amount of tax depends on certain factors. The corporate tax rate structure in Netherlands is as below:
- For the first 25,000 Euro: 20%
- For the second 35,000 Euro: 23.5%
- Above 35, 000 Euro: 25.5%
- Wage Withholding Tax: Every paid employee in Netherlands need to pay wage tax in a periodic manner. Wage withholding tax will be the summation of wage tax and social security contributions. The social security contributions cover the old age pension, exceptional medical expenses and surviving relatives benefit. Any working individual in Netherlands needs to have a social security number and accordingly need to pay social security contributions.
- Value Added Tax: Every taxable enterpriser in Netherlands need to pay VAT (Value Added Tax), which is alternatively called Turnover Tax. VAT is imposed at each stage of the series of production, distribution of goods and services.
- Environmental Tax: Environmental tax consists of energy tax, groundwater tax, taxes on tap water, waste and fuel. Some other types of taxes like motor vehicle tax and excise duty also fall under environmental tax category.