Income Tax in Netherlands

Income tax in Netherlands is the tax imposed on annual income of all the taxable entities of Netherlands. There are three types of income taxes that are represented in the form of Boxes as detailed in the following section.

Income Tax in Netherlands: Categories

Income tax in Netherlands are brought together into the form of three boxes, which are as follows:

• Box 1: All the taxable incomes from work and home, will fall under this category.
• Box 2: All the taxable incomes from substantial interest will fall under this category
• Box 3: All the taxable incomes from savings and investments will fall under this category

Box 1(Progressive tax on wages): This category of tax covers income from work and home, including:

• Personal deductions
• Expenses through childcare activities
• Income generated from employment
• Negative personal deduction
• Profits earned from professional and business activities
• Income earned from home
• Expenses for creating provision for employment
• Negative expenses for creating provision for employment
• Income through periodic payment

Box 2 ( Tax on income from a substantial interest): The government of Netherlands imposes 25% flat tax on income from substantial commercial interest.

Box 3 (Income from savings and investments): A tax of 1.2% per year will be levied on a person’s overall value of savings and investment. The Box 3 income tax will be levied on the following events:

• Stocks and other shares
• In the event of a person having savings accounts
• In the event of possessing a second home.
• In the event of any endowment insurance policy