In the Netherlands, residents pay income tax on their worldwide income. Non-residents are taxed on income sourced in the Netherlands only. Income tax is collected by Tax and Customs Administration. For purposes of determining income tax, income is divided into the following three categories, so called boxes:[1][2]
Box 1: income from work and home ownership
A progressive tax rate on income from work and housing with two tax brackets applies to income in Box 1. In the past, there were four brackets, the highest of which was 72%, but in 1990 it was changed to 60%, and in 2001 it became 52%. The four bracket system was changed to a two bracket system in 2020, with lower incomes taxed at 36.97% (as of 2024) and higher incomes at 49.50%.[3] Certain expenditures, referred to as personal allowances, can be deducted from income prior to tax calculation. Examples of personal allowances are donations to eligible charities, maintenance costs, medical or study expenses. Income-dependent credits reduce the tax owed.[4] Taxpayers above the official retirement age are entitled to a reduced tax rate.[1]
Box 2: financial interest in a company
A two-bracket tax of 24.5% and 33% applies to income from substantial interest in a company. A substantial interest in a company is defined as owning at least 5% of its shares, options or profit-sharing certificates; either by the taxpayer themselves or together with their tax partner.[1][2]
Box 3: savings and investment
Box 3 concerns income from wealth. Wealth is calculated as value of assets (such as savings or shares) minus any debts. Income from wealth is taxed at a 36% rate. For tax purposes, a fixed return on savings and investments is presumed, based on the actual distribution of Box 3 assets (with different rates applied to bank assets and physical assets). Presumed gains are calculated each year based on market returns realized in the past. A tax allowance on capital yields is provided.[1][5] Certain assets are so called tax-free capital and are exempt from income tax, such as green investments.[6]
For income taxes, the tax year is equivalent to calendar year. Tax returns are due by 1 May of the subsequent year. Married couples submit a joint assessment, except in the case when a divorce petition has been filed.[5]
Value added tax
The value added tax system follows European Union regulation. For value added tax there are three categories: foods and essentials, non-foods and luxuries, and special goods. These three categories have rates of 9%, 21%, and 0%, respectively. The non-foods and luxuries percentage was increased from 19% to 21% on 1 October 2012, while the foods and essentials percentage was increased from 6% to 9% percent on 1 January 2019. The special goods cover:
Unlike some states in member countries that make up the EU, the Dutch tax regime allows the deferral of import VAT payment. Instead of conducting payment at the time when goods are imported to the EU, the VAT payment may be deferred to periodic VAT returns. The import VAT needs to be reported; however, as the amount may be deducted from the corresponding period VAT return, the deferral can prevent cash flow disadvantage arising from paying import VAT immediately at the time of import to the EU.[9][2]
Generally, private and public companies with Dutch residency are subject to corporate income tax on their worldwide income. Corporate tax rate is based upon taxable amount, which equals taxable profit in the corresponding year minus deductible losses. In 2024, for taxable amount below €200,000, a 19% tax rate was applicable. Taxable amount of €200,000 and above was taxed at a 25.8% tax rate.[10] Corporate tax year is equivalent to calendar year unless stated otherwise in the company's articles of association. Tax year typically follows a 12-month period; deviations are possible in the first year of incorporation.[11][5]
Innovation box
To foster innovation research, an innovation box provides tax relief for innovative activities.[11] Profits derived from self-developed intellectual property (including royalties) that qualify for the innovation box are subject to a reduced tax rate. Since January 1, 2018, the effective tax rate applicable to corporate income in the innovation box is 7%. This feature of the tax framework provides a notable tax incentive for research and development activities in the Netherlands.[5][2]
Substantial holding exemption
If qualified for a substantial holding exemption, a parent company is fully exempt from paying tax on the dividends and capital gains it receives from a subsidiary. Substantial holding is defined as holding at least 5% of shares in the subsidiary. The subsidiary concerned may have both Dutch or non-Dutch residency; the equal tax treatment allows non-Dutch subsidiaries to better compete with local ones. Substantial holding exemption prevents double corporate taxation of profits.[11] This feature of the tax regime makes the Netherlands an attractive location for European headquarters. To qualify for substantial holding exemption, at least one of three conditions (tests) must be met:
Motive test: shareholding in the subsidiary does not serve as a mere portfolio investment.
Effective tax rate test: according to Dutch tax standards, a reasonable effective tax rate is applicable to the subsidiary (that is, an effective tax rate of at least 10%).
Asset test: less than 50% of total assets of the subsidiary are low-taxed free portfolio investments.[2][5]
Tax groups with subsidiaries
In the Netherlands, a parent company and one or more of its subsidiaries may form a tax group if certain conditions are met: Primarily, the parent company shall hold at least 95% of shares in the subsidiary. Moreover, the parent company and the subsidiary need to be established in the Netherlands, follow the same financial year and apply the same accounting policies. Members of a tax group are treated as a single taxpayer by tax authorities. Key advantages of fiscal unity are that losses incurred by one company may be deducted from profits generated by other members of the group, and that fixed assets may be transferred between companies without corporate income tax consequences.[11][5]
Property tax
Property tax or land value tax is claimed annually by municipalities. A fraction of the value of real estate (about a per mille) is defined as onroerendezaakbelasting (OZB). The money collected from the real-estate owners in its area can be used by the municipality to maintain the infrastructure (roads etc.). The real-estate values are estimated independently and updated annually. Taxation varies dramatically over different regions and municipalities. In addition to the property tax itself, there is a complicated additional taxation system for different infrastructural support systems: water-level management, water cleaning, waste management etc. Property tax does not belong to personal allowances deductible for income tax purposes.[5]
Inheritance tax
The inheritance tax (successierecht) charges beneficiaries of an inheritance received from Dutch residents. In case of emigration, Dutch nationals are considered Dutch residents for further 10 years. Inheritance tax rate ranges from 10% to 40%.[5] A part of inheritance is exempt from taxation; the amount exempted depends on the relationship of beneficiary to the deceased person.[12]
Wealth tax
In lieu of a dividend or capital gains tax, the Netherlands levies a tax on "income earned through investments" (box 3) that functions like a wealth tax, assuming fixed rates of return for assets and assessing a (as of 2023) 32% income tax on the assumed return for assets, minus debts, above €57000 as of 2023 (doubled if a tax partner, eg. spouse, shares the residence).[13] Prior to 2021, the tax functioned like a wealth tax by assuming a certain distribution of returns based on the amount of wealth, but, due to a court ruling,[14] the tax is now assessed solely on the actual distribution of assets. The assumed rate of return varies on the type of asset and, for 2023, is assumed to be 0.36% on cash and bank accounts, 6.17% on investments, and 2.57% on debts.
A tax is a mandatory financial charge or some other type of levy imposed on a taxpayer by a governmental organization to collectively support government spending, public expenditures, or as a way to regulate and reduce negative externalities. Tax compliance refers to policy actions and individual behaviour aimed at ensuring that taxpayers are paying the right amount of tax at the right time and securing the correct tax allowances and tax relief. The first known taxation took place in Ancient Egypt around 3000–2800 BC. Taxes consist of direct or indirect taxes and may be paid in money or as its labor equivalent.
A capital gains tax (CGT) is the tax on profits realized on the sale of a non-inventory asset. The most common capital gains are realized from the sale of stocks, bonds, precious metals, real estate, and property.
Income tax in the Netherlands is regulated by the Wet inkomstenbelasting 2001.
In the United Kingdom, taxation may involve payments to at least three different levels of government: central government, devolved governments and local government. Central government revenues come primarily from income tax, National Insurance contributions, value added tax, corporation tax and fuel duty. Local government revenues come primarily from grants from central government funds, business rates in England, Council Tax and increasingly from fees and charges such as those for on-street parking. In the fiscal year 2014–15, total government revenue was forecast to be £648 billion, or 37.7 per cent of GDP, with net taxes and National Insurance contributions standing at £606 billion.
In France, taxation is determined by the yearly budget vote by the French Parliament, which determines which kinds of taxes can be levied and which rates can be applied.
Taxation represents the biggest source of revenues for the Peruvian government. For 2016, the projected amount of taxation revenues was S/.94.6 billion. There are four taxes that make up approximately 90 percent of the taxation revenues:
Taxation in Greece is based on the direct and indirect systems. The total tax revenue in 2017 was €47.56 billion from which €20.62 billion came from direct taxes and €26.94 billion from indirect taxes. The total tax revenue represented 39.4% of GDP in 2017. Taxes in Greece are collected by the Independent Authority for Public Revenue.
This is a list of the maximum potential tax rates around Europe for certain income brackets. It is focused on three types of taxes: corporate, individual, and value added taxes (VAT). It is not intended to represent the true tax burden to either the corporation or the individual in the listed country.
Taxes in Switzerland are levied by the Swiss Confederation, the cantons and the municipalities.
Netherlands benefits from a strategic geographic location, a world-class economy, a stable political climate, and a skilled workforce. The Netherlands has a large network of tax treaties, a low corporate income tax rate and a full participation exemption for capital gains and profits. These characteristics, in addition to a favorable tax environment, make Netherlands one of the most open economies in the world for multinational corporations (MNCs).
Taxation in Israel include income tax, capital gains tax, value-added tax and land appreciation tax. The primary law on income taxes in Israel is codified in the Income Tax Ordinance. There are also special tax incentives for new immigrants to encourage aliyah.
Taxation in Italy is levied by the central and regional governments and is collected by the Italian Agency of Revenue. Total tax revenue in 2018 was 42.4% of GDP. The main earnings are income tax, social security, corporate tax and value added tax. All of these are collected at national level, but some differ across regions. Personal income taxation in Italy is progressive.
Taxation in Norway is levied by the central government, the county municipality and the municipality. In 2012 the total tax revenue was 42.2% of the gross domestic product (GDP). Many direct and indirect taxes exist. The most important taxes – in terms of revenue – are VAT, income tax in the petroleum sector, employers' social security contributions and tax on "ordinary income" for persons. Most direct taxes are collected by the Norwegian Tax Administration and most indirect taxes are collected by the Norwegian Customs and Excise Authorities.
Taxes in Germany are levied at various government levels: the federal government, the 16 states (Länder), and numerous municipalities (Städte/Gemeinden). The structured tax system has evolved significantly, since the reunification of Germany in 1990 and the integration within the European Union, which has influenced tax policies. Today, income tax and Value-Added Tax (VAT) are the primary sources of tax revenue. These taxes reflect Germany's commitment to a balanced approach between direct and indirect taxation, essential for funding extensive social welfare programs and public infrastructure. The modern German tax system accentuate on fairness and efficiency, adapting to global economic trends and domestic fiscal needs.
Taxation may involve payments to a minimum of two different levels of government: central government through SARS or to local government. Prior to 2001 the South African tax system was "source-based", where in income is taxed in the country where it originates. Since January 2001, the tax system was changed to "residence-based" wherein taxpayers residing in South Africa are taxed on their income irrespective of its source. Non residents are only subject to domestic taxes.
Taxation in Estonia consists of state and local taxes. A relatively high proportion of government revenue comes from consumption taxes whilst revenue from capital taxes is one of the lowest in the European Union.
In Slovakia, taxes are levied by the state and local governments. Tax revenue stood at 19.3% of the country's gross domestic product in 2021. The tax-to-GDP ratio in Slovakia deviates from OECD average of 34.0% by 0.8 percent and in 2022 was 34.8% which ranks Slovakia 19th in the tax-to-GDP ratio comparison among the OECD countries. The most important revenue sources for the state government are income tax, social security, value-added tax and corporate tax.
Taxation in Belgium consists of taxes that are collected on both state and local level. The most important taxes are collected on federal level, these taxes include an income tax, social security, corporate taxes and value added tax. At the local level, property taxes as well as communal taxes are collected. Tax revenue stood at 48% of GDP in 2012.
A destination-based cash flow tax (DBCFT) is a cashflow tax with a destination-based border-adjustment. Unlike traditional corporate income tax, firms are able to immediately expense all capital investment. This ensures that normal profit is out of the tax base and only super-normal profits are taxed. Additionally, the destination-based border-adjustment is the same as how the Value-Added Tax treat cross-border transactions—by exempting exports but taxing imports.
Taxation is an important part in the Turkish economy. Turkey has a 41.65% tax to GDP ratio. Most of the taxes are levied by central government. However some specific taxes are levied by municipalities, with the amount determined by centrally issued legislation. Municipalities have no authority to make their own tax laws.
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