Dutch tax & pension

dutch tax system

Box 1 - work & home: salary, wages, business income (self-employed), benefits, income related to primary residence

• progressive tax rates
• two? brackets
• includes social security contributions: AOW, Anw, WLZ
• deductions: mortgate interest, work-related tax credits, general tax credit, healthcare tax credit
  • loonheffingskorting
  • arbeidskorting
• https://www.belastingdienst.nl/wps/wcm/connect/bldcontentnl/belastingdienst/prive/inkomstenbelasting/heffingskortingen_boxen_tarieven/boxen_en_tarieven/box_1/box_1

Box 2 - substantial interest: own ≥5% shares in private company (BV)

• tax on dividends, capital gains from selling shares
• flat rate (26-27%?)

Box 3 - savings & investments: savings accounts, investments (stocks, ETFs), second homes, crypto, minus debts

• government assumes fictional (deemed) return based on past returns, you are taxed on that assumed return. So even if the market declines, you might pay tax as if you gained money.
  • you take whatever is over the limit (heffinsvrij vermogen), calculate the assumed return, and tax that at a flat rate, currently 36%
  • proposal from 2028: tax based on actual returns (though still unrealized gains).
• tax-free allowance: https://www.belastingdienst.nl/wps/wcm/connect/nl/box-3/content/heffingsvrij-vermogen
• rates depend on asset type

Employer automatically withholds income tax:

• old-age pension (AOW)
• survivor benefits (Anw)
• long-term care (WLZ)

If your net worth is above the tax-free bracket of box 3, it may be worth it to start a BV that does investments, e.g. via Ligo.

dutch pension

3 pillars:

• AOW (state pension)
  • basic pension, flat amount
  • build up each year you live/work in NL
  • full AOW is 50 years
  • each year, 2%
• Occupational pension (via employer)
  • invested over working life
  • defined contribution
• Private pension/individual savings