If you live abroad and have income from the Netherlands, in most cases you will have to pay income tax on it in the Netherlands. The Tax and Customs Administration classifies income (and tax deductions) in three boxes.
You only have to declare income from the Netherlands in your tax return. This does not necessarily mean that you have to pay tax in the Netherlands on all this income.
Tax deductions are available in each box. Certain costs that you incur can be deducted from your income if you are a qualifying a non-resident taxpayer. Tax deductions reduce the income on which you have to pay income tax.
View the boxes
Income in box 1 includes:
- salaries, benefits and pensions,
- income from business activities,
- income earned as a freelance, childminder, artist or professional athlete,
- periodic payments (such as annuity or maintenance payments),
- negative personal allowances (if you are refunded too much on a previous tax return),
- refunded premiums for annuities and the like,
- notional rental value for owner-occupiers (information in Dutch),
- life insurance payments to settle a mortgage debt.
Deductions in box 1
Deductible items in box 1 include:
- public transport commuting allowance,
- expenses for an owner-occupied dwelling (e.g. for your mortgage),
- income insurance and annuity premiums,
- personal allowances (e.g. maintenance payments, certain healthcare costs, study expenses and gifts).
Box 2 includes income from a ‘substantial interest’ in the Netherlands. This box is relevant to shareholders and entrepreneurs. Family members of entrepreneurs can also have income in box 2.
You are considered by the Tax and Customs Administration to have a substantial interest if you and your tax partner (information in Dutch) together have an interest of at least 5% in:
- a company’s share capital,
- a company’s profit-sharing certificates,
- the right to use a company’s profit-sharing certificates or shares,
- the right to vote in a cooperative or association founded on cooperative principles.
You also have a substantial interest if you and your tax partner together hold options to buy at least 5% of the shares in a company.
Deductions in box 2
There are no deductible items specifically for box 2. But if the amounts you deduct in box 1 and box 3 are together higher than your income in those boxes, you can deduct the excess in box 2.
Box 3 includes your wealth in the form of investments and real estate in the Netherlands. If you live outside the Netherlands, the Tax and Customs Administration will not look at your Dutch bank account or an annuity insurance policy taken out in the Netherlands.
You must declare the following assets in the Netherlands:
- real estate in the Netherlands other than your own home, e.g. a holiday home or dwelling that you rent out,
- rights to real estate in the Netherlands, e.g. a right to live in a dwelling that you do not own (right of usufruct) or ground lease,
- rights to a share in the profit of a business in the Netherlands whose management is located in the Netherlands. These rights may not be declared in box 1 or box 2. They are not rights that arise from owning securities or employment.
Deductions in box 3
Deductible items for box 3 include debts relating to Dutch assets. One example would be a mortgage on a holiday home in the Netherlands.
No income from the Netherlands
If you live outside the Netherlands and have no income from or assets in the Netherlands, you normally won’t need to file an income tax return in the Netherlands. But you may have to file one in your country of residence. Find out what to do if you do not have any income from the Netherlands.
If you have any questions, please do not hesitate to contact us.