Tax law and fiscal law

Created16 juni 2025

Updated21 juni 2025

bySabine Imdahl

Understanding tax obligations is essential

Understanding tax obligations is essential for anyone living, working or doing business in the Netherlands. Whether you are an employee, a freelancer or a business owner, Dutch tax law and fiscal law (belastingrecht or fiscaal recht) affect your rights, responsibilities and financial planning.

This article explains the basics of the Dutch tax system, including why taxes exist, what they fund, and how different rules apply to individuals, expats and businesses.

What is tax law – and why do we pay taxes?

Tax law refers to the legal rules that determine how taxes are imposed, calculated, collected and enforced. In the Netherlands, this body of law is commonly called belastingrecht or fiscaal recht.

While the terms tax law and fiscal law are often used interchangeably, there is a small difference in emphasis:

Tax law focuses on specific taxes like income tax, VAT and corporate tax.
Fiscal law can be used more broadly to include areas like public budgets and government finance.

In Dutch practice, both terms generally refer to the same legal area, and most legal professionals use belastingrecht for both.

Taxes are collected to fund public services and infrastructure such as education, health care, roads, social security and emergency services. Therefore, paying taxes is not only a legal obligation, but also a way of contributing to society and ensuring essential systems keep running.

Main sources of Dutch tax and fiscal law

The key laws include:

General Tax Act (Algemene wet inzake rijksbelastingen – AWR) [1]
Income Tax Act 2001 (Wet inkomstenbelasting 2001) [2]
Corporate Income Tax Act 1969 (Wet op de vennootschapsbelasting 1969) [3]
Value Added Tax Act 1968 (Wet op de omzetbelasting 1968) [4]

These laws apply to individuals, businesses and organisations. In addition, they are enforced by the Dutch Tax and Customs Administration (Belastingdienst).

Income tax for individuals

If you live or work in the Netherlands, you are likely considered a resident taxpayer. This means you are taxed on your worldwide income (wereldinkomen), including income from abroad. By contrast, non-resident taxpayers are usually taxed only on income from Dutch sources – for example, work performed in the Netherlands or property located here.

Who is considered a taxpayer in the Netherlands?

Resident taxpayers are those registered in the Netherlands or who maintain a permanent home or primary income here. However, non-residents may still be liable for tax on specific Dutch income, depending on their work, assets or presence in the country.

How does the Netherlands avoid double taxation?

To prevent individuals from being taxed on the same income in more than one country, the Netherlands has signed double taxation treaties (belastingverdragen) with many countries [5]. These agreements define which country may tax certain types of income, such as salary, pensions or dividends.

As a result, you may be entitled to a tax exemption or a reduction (aftrek voorkoming dubbele belasting) in the Netherlands for income that is taxed abroad.

What if there is no tax treaty?

Even if there is no tax treaty in place, you are still protected. The Decree on the Avoidance of Double Taxation 2001 (Besluit voorkoming dubbele belasting 2001) [6] applies to situations without a formal agreement. In practice, this ensures you do not pay tax twice on the same income by granting unilateral relief under Dutch law.

What if you are still taxed twice?

In rare cases, double taxation may still occur – even when a treaty exists. For example, countries may interpret the treaty differently or disagree on residency.

In such cases, you can request a mutual agreement procedure (onderlinge overlegprocedure) [7]. This allows the Dutch tax authority and the foreign tax authority to negotiate and find a solution under the applicable treaty.

Reporting foreign income and claiming relief

If you are a Dutch tax resident and earn income or hold assets abroad, you must report everything in your annual tax return. Then, the relevant treaty or Dutch ruling will determine whether – and how – your Dutch tax bill is adjusted to prevent double taxation.

Failing to report foreign income can lead to penalties, so it is essential to be thorough and accurate.

How the Dutch income tax system is structured

Dutch personal income tax is divided into three boxes, each covering different types of income:

Box 1: Income from work and home ownership – such as salary, freelance earnings and mortgage benefits
Box 2: Income from substantial shareholdings (typically 5% or more in a company)
Box 3: Income from savings and investments – such as bank accounts, shares and second homes

Each box comes with its own set of tax rules, thresholds and rates. As part of the Dutch progressive tax system, higher income is taxed at a higher rate. Moreover, these rates and income brackets are reviewed and adjusted on a yearly basis.

The 30% ruling for expats

Highly skilled migrants recruited from abroad may qualify for the 30% ruling (30%-regeling) – a Dutch tax exemption that compensates for the extra costs of relocating to the Netherlands.

If approved, this ruling allows 30% of gross salary to be paid tax-free for a limited period. The remaining 70% is taxed under the normal income tax rules.

To qualify, you must:

Be hired from outside the Netherlands
Possess specific expertise that is scarce in the Dutch labour market
Meet government-set salary thresholds
Apply jointly with your employer within four months of starting work

In addition, the ruling allows partial non-resident tax status. This means you may be exempt from taxation in Box 2 and Box 3 (such as foreign investments or shares).

Since 1 January 2024, the 30% benefit is phased out gradually [8]:

30% for the first 20 months
20% for the next 20 months
10% for the final 20 months

(Only if you continue to meet the salary requirements throughout the full period.)

Business and self-employment taxes

If you run a business or work as a freelancer (zelfstandige), you must register with the Chamber of Commerce (Kamer van Koophandel) [9] and file regular tax returns.

Your fiscal obligations may include:

Income tax (if you’re a sole trader or in a partnership)
Corporate income tax (if you operate through a private limited company – besloten vennootschap or BV)
VAT (omzetbelasting) on your sales or services
Payroll tax (loonheffing) if you employ staff

Depending on your situation, you may also benefit from tax deductions and credits. These include the entrepreneur’s deduction (ondernemersaftrek) and the small business scheme (kleineondernemersregeling – KOR).

Corporate tax and international business

Companies based in the Netherlands, or those with a permanent Dutch presence, are generally subject to corporate income tax.

The system uses:

A lower rate for profits up to a certain amount
A higher rate for profits above that threshold

The Netherlands has signed many tax treaties to avoid double taxation. Moreover, it follows international tax principles (OECD, EU) regarding transparency and fair taxation. If you operate internationally, you may need to comply with additional rules on:

Transfer pricing
Substance requirements
Controlled foreign companies (CFC)
VAT (value added tax)

VAT and invoicing obligations

Most businesses in the Netherlands must charge value added tax (VAT) on their goods or services. VAT (omzetbelasting or BTW) is currently applied at:

21% standard rate
9% reduced rate (for essential goods and services like groceries or books)
0% rate (for certain international transactions)

However, some services – such as education and healthcare – are exempt from VAT.

If you’re a business, you must register for VAT, include it on your invoices, and file VAT returns monthly or quarterly. If you trade within the EU, intra-community VAT rules also apply.

Tax returns and deadlines

Individuals must usually file their income tax return each year by 1 May via the online portal of the Dutch Tax Authorities (“Mijn Belastingdienst”). If needed, extensions can be requested.

Businesses must file tax returns for:

VAT
Payroll tax
Corporate tax (within five months of the end of the financial year)

They can log in via a different portal on the website of the Dutch Tax Authorities.

Late submissions may result in penalties or interest charges. If you disagree with a tax decision, you can file an objection (bezwaar) or, if necessary, appeal in court.

Inspections and disputes

The Dutch Tax Authority (Belastingdienst) has the right to audit individuals and businesses. You must keep financial records for seven years, or ten years for certain assets like property.

If you disagree with a tax assessment or decision, you can challenge it. The process usually follows these steps:

Objection (bezwaar) – a written objection to the tax authority explaining why you disagree
Appeal (beroep) – if the objection is rejected, you can appeal to the court
Further appeal – in some cases, you can take the case to the Court of Appeal, and possibly to the Supreme Court (Hoge Raad) if legal interpretation is in question

Alternatively, some cases may be resolved through settlements or advance rulings.

Conclusion

Tax law and fiscal law in the Netherlands are detailed and dynamic, but also clearly regulated. Whether you’re a private individual, an expat, a freelancer or a company director, it’s important to understand your obligations – and your rights.

Taxes fund the systems we all rely on: healthcare, education, roads and public safety. When handled properly, Dutch tax law provides not only structure, but also benefits – from expat rulings to deductions for entrepreneurs.

If you’re unsure about your situation, or dealing with cross-border income or international business, legal and tax advice can help you make informed decisions and stay compliant.

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Disclaimer: The information provided on this website is for general informational purposes only and is not legally binding. Although we strive for accuracy, the content may contain errors. If you notice any mistakes, please let us know by contacting us via the contact form located at the bottom of the page.

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