BTW & Other Dutch Taxes

The Dutch Taxes

All countries have different tax rules although the European Union is working on unifying all taxes. With free trade between the European Union countries and the citizens working more and more abroad but within European Union countries, it is a necessity in the future. Also than competitiveness between countries won’t be taxes. I will mention the most important Dutch taxes and in the category External Link there are links to the updated tax laws. This is necessary because for example the Dutch tax law on income differs every year. There are more Dutch taxes then I will mention in this blog.  For me these are the most important once, because these are the ones almost anybody will encounter in their lifetime on earth.

Belastingdienst

Each year I pay income tax. Each citizen of The Netherlands will know the Belastingdienst for income tax and sometimes for other taxes. The Belastingdienst is the organization which is comparable with the IRS in The United States of America. The Belastingdienst is the one where I file all my taxes. It is also the one who answers tax questions through X (formerly Twitter) and the belastingtelefoon (phone service of the Belastingdienst). It is part of the Ministry of Finance.

BTW is The Dutch VAT

BTW stands for Belasting Toegevoegde Waarde. In English the BTW is called VAT. VAT stands for Value Added Tax. Each country has its own rules and percentages for BTW. Sometimes tourist can get their BTW back if they fill in a custom form and present that at the airport. In The Netherlands products and services are mostly required to give the price including tax. This is different from the United States where the price might surprise me at the counter when I don’t think about the BTW.

BTW

Everybody pays tax on almost all products and services in The Netherlands. It varies from 0, 6 or 21 percentages.  Entrepreneurs can deduct the BTW (VAT) tax they pay form the BTW they charge on their products or services. Each quarter they have to fill in BTW-tax and it must be paid before the end of the first month of the next quarter. The BTW can be paid monthly, quarterly, or yearly. Most entrepreneurs pay quarterly. An example: The 4th quarter BTW must be filed and paid before 31 January. I always have to file BTW tax. Also if there was no activity in my company, I than file 0 euros.

Income Tax

Income tax is filed by a natural person. It doesn’t matter if I am an entrepreneur or working for a boss and get a wage, all must file income tax. For people working for a boss this means they get each month their paycheck and tax is already deducted from their paycheck. Paycheck earners file income tax for costs they can deduct and other earnings. As an entrepreneur I file most of the time once a year for income tax. This means as an entrepreneur I have to set apart my tax till I have to pay this. Sometimes an entrepreneur can ask the Belastingdienst if they can file tax periodically, so they don’t need to pay a big amount at once. Income Tax season start 1 March for the ended year, and I pay or get money back depending on my tax filed.

Inheritance Tax

The Dutch inheritance tax is a simple one. I pay on the money I get from my dead sibling or parent. The relationship with the dead person matters in how much inheritance tax I am going to pay and of course the amount I get. Sometimes the inheritance isn’t paid immediately, because I get my inheritance after another family member dies. An example: I know I inherit money after my father (1945-2011) died, but I will get the money after my mom dies or if she sells their house. Each inheritance is different and is stated at the notary.

Corporate Tax

With Corporate tax a company pays and not a person. In The Netherlands there are a few ways I can set up my company depending on what I want with my company and its earnings. The Eenmanszaak files tax as a person, see income tax earlier. The other company forms:

• BV

• NV

• Stichtingen or Vereniging.

All file corporate tax. Stichting or Vereniging file only if they have a certain amount of profit. Corporate tax is taxed according to the same principle as income tax.