|An aspect of fiscal policy|
|Life in the Netherlands|
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Taxation in the Netherlands is defined by the income tax (Wet op de inkomstenbelasting 2001), the wage withholding tax (Wet op de loonbelasting 1964), the value added tax (Wet op de omzetbelasting 1968) and the corporate tax (Wet op de vennootschapsbelasting 1969).
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:
A progressive tax rate 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 bracked-system in 2020, with the lower incomes taxed for 37.35% and the higher incomes for 49.50%.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. Taxpayers above the official retirement age are entitled to a reduced tax rate.
A flat tax rate of 25% 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.
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 30% rate. For tax purposes, a fixed return on savings and investments is presumed, based on the average distribution of Box 3 assets (capital mix). Presumed gains are calculated each year based on market returns realized in the past. A tax allowance on capital yields is provided.
For income taxes, tax year is equivalent to calendar year. Tax return shall be submitted before May 1 of the subsequent year. Married couples shall submit a joint assessment, except for the case when a divorce petition has been filed.
The value added tax system follows EU 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 in some other member states of the EU, the Dutch tax regime allows 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 return. 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 time of import to the EU.
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 2018, for taxable amount below €200,000, a 20% tax rate was applicable. Taxable amount of €200,000 and above was taxed at a 25% tax rate. The corporate tax rates are both due to decrease by 1 percentage point in 2019, 1.5 percentage point in 2020 and further 1.5 percentage point in 2021; resulting in a 16% tax rate in the first bracket and 21% tax rate in the second bracket. 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.
To foster innovation research, an innovation box provides tax relief for innovative activities.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.
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.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:
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.
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.
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%.A part of inheritance is exempt from taxation; the amount exempted depends on the relationship of beneficiary to the deceased person.
Possessions like savings, shares, houses that are not the primary living etc. are taxed when a tax payer (filing single) has more than € 30,360 (this is the amount for 2019). For couples, this tax-free amount is double. Consumer goods like cars and furniture, that are not held as an investment, are excluded.
The tax rate comes in tiers, and the following numbers are for 2019 and will be updated in future years: it is a 0.58% tax for € 30,361 to € 102,010 of assets, 1.34% for € 102,010 to € 1,020,096 and 1.68% on any euros of assets above € 1,020,096.
The gift tax (schenkingsrecht) charges the beneficiary of a gift.[ quantify ]
A capital gains tax (CGT) is a tax on the profit 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.
Taxation in the United Kingdom 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.
Taxation in the Republic of Ireland in 2017 came from Personal Income taxes, and Consumption taxes, being VAT and Excise and Customs duties. Corporation taxes represents most of the balance, but Ireland's Corporate Tax System (CT) is a central part of Ireland's economic model. Ireland summarises its taxation policy using the OECD's Hierarchy of Taxes pyramid, which emphasises high corporate tax rates as the most harmful types of taxes where economic growth is the objective. The balance of Ireland's taxes are Property taxes and Capital taxes.
Taxation in Greece, as in most developed nations, 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.
Taxation in Denmark consists of a comprehensive system of direct and indirect taxes. Ever since the income tax was introduced in Denmark via a fundamental tax reform in 1903, it has been a fundamental pillar in the Danish tax system. Today various personal and corporate income taxes yield around two thirds of the total Danish tax revenues, indirect taxes being responsible for the last third. The state personal income tax is a progressive tax while the municipal income tax is a proportional tax above a certain income level.
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.
In Austria, taxes are levied by the state and the tax revenue in Austria was 42.7% of GDP in 2016 according to the World Bank The most important revenue source for the government is the income tax, corporate tax, social security contributions, value added tax and tax on goods and services. Another important taxes are municipal tax, real-estate tax, vehicle insurance tax, property tax, tobacco tax. There exists no property tax. The gift tax and inheritance tax were cancelled in 2008. Furthermore, self-employed persons can use a tax allowance of €3,900 per year. The tax period is set for a calendar year. However, there is a possibility of having an exception but a permission of the tax authority must be received. The Financial Secrecy Index ranks Austria as the 35th safest tax haven in the world.
The tax legislation of Azerbaijan is comprised by the Constitution of Azerbaijan Republic, the Tax Code and legal standards which are adopted herewith. The taxes levied in Azerbaijan can be generally broken down into 3 main types: state taxes, taxes of autonomy republic and local (municipal) taxes. State taxes include the following: personal income tax, corporate tax, value added tax, excise tax, property tax, land tax, road tax, mineral royalty tax and simplified tax. Taxes of autonomy republic are the same as state taxes but levied in Nakhichevan Autonomous Republic.
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. Most important earnings are: income tax, social security, corporate tax and value added tax. All of those are collected at national level, but some of those differs across regions. Personal income taxation in Italy is progressive.
Taxation in Finland is carried out by the State of Finland, mainly through the Finnish Tax Administration, an agency of the Ministry of Finance. Finnish Customs and the Finnish Transport and Communications Agency Traficom, also collect taxes. Taxes collected are distributed to the Government, municipalities, church, and the Social Insurance Institution, Kela.
Taxation in Norway is levied by the central government, the county municipality (fylkeskommune) and the municipality (kommune). 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 (Skatteetaten) and most indirect taxes are collected by the Norwegian Customs and Excise Authorities.
Taxes in Germany are levied by the federal government, the states (Länder) as well as the municipalities (Städte/Gemeinden). Many direct and indirect taxes exist in Germany; income tax and VAT are the most significant.
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", wherein 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 29.5% of the country's gross domestic product in 2013. The most important revenue sources for the state government are income tax, social security, value-added tax and corporate tax.
Taxes in Georgia is collected on both state and local level. The most important taxes are collected on federal level, these taxes include an income tax, corporate taxes and value added tax. On local level property taxes well as various fees are collected. There are 6 flat tax rates in Georgia - Corporate Profit Tax, Value Added Tax, Excise Tax, Personal Income Tax, Import Tax and Property Tax.
In Belgium, taxes 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 various fees are collected. Tax revenue stood at 48% GDP in 2012.
Taxes in Cyprus are levied by both the central and local governments. Tax revenue stood at 39.2% of GDP in 2012. The most important revenue sources are the income tax, social security, value-added tax and corporate tax, and are all collected by the central government.