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 Dennis Vermeulen

By Dennis Vermeulen | July 16, 2016 |

IinH Personal Income Tax

Personal Income Tax

Individuals resident in the Netherlands are liable to personal income tax on their worldwide income. Income tax is a tax on an individual’s income, which is levied as one sum together with an individual’s national social security contributions.Non-residents are also liable to personal income tax on certain elements of income derived from Dutch sources, including income from employment within the Netherlands (subject to the terms of any appropriate double-taxation agreement). A number of companies (partially) pay their employees in the form of stock options or through a bonus scheme. These stock options and bonus payments are subject to income tax.

Withholding taxes

In general, the wage withholding tax constitutes a prepayment of personal income tax. All employers in the Netherlands, including the (for Dutch wage tax purposes deemed) permanent establishments of foreign employers, are required to withhold this tax from payments to their employees and remit it to the tax collector periodically. The tax is levied on the taxable employment income of non-resident as well as resident employees. The withholding rates are progressive and in principle similar to the personal income tax rates.

If the tax withheld exceeds the final amount of personal income tax payable, resident taxpayers may request a refund of the excess tax payments. A request for a refund must be accompanied by a completed tax return. A non resident is not entitled to a refund, but under some circumstances excess withholding tax is nevertheless reimbursed if a tax return has been filed. An income tax refund will only be paid out if the refund amounts to at least EUR 14. Further, in case a (non) resident individual receives an invitation to file a Dutch income tax return, this individual is obligated to file the return before 1April of the year following the tax year it concerns. There is a possibility to extend the filing deadline. A payable income tax is only payable in case the payable income tax is at least EUR 45.

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