The tax authority (Belastingdienst) and allowances in the Netherlands

Your income is classified into three boxes: box 1 is income from work and home, including salary, wages, pension, self-employment profit and the value of a home you own, with progressive rates applied.

• Box 2 is income from a substantial interest in a company.
• Box 3 is savings and investments, taxed on a deemed return after an exemption.
• For most employees all their income is in box 1.
• The employer deducts tax from each salary and takes into account general tax credits (heffingskortingen) such as the general credit and the labour credit, so you need no special step to get them, and you can check that on your payslip.

Income tax returns (aangifte inkomstenbelasting) for the previous year are submitted between 1 March and 1 May each year through Mijn Belastingdienst with DigiD, and the deadline can be extended by official request.

• You receive an invitation letter if it is required of you, and the return may be pre-filled with data sent by the employer and the bank.
• Review the data and add what is missing such as large medical costs, gifts or interest.
• If you did not receive an invitation but expect a refund you can file a voluntary return within five years.
• Do not ignore the invitation, since delay leads to fines.
• After the return you receive an assessment (aanslag) showing the amount due or refunded.

The tax authority manages four main allowances by income and household: the health care allowance (zorgtoeslag) to help with the health insurance premium, the rent allowance (huurtoeslag) for those who rent a home within price limits, the childcare allowance (kinderopvangtoeslag) for working families using an approved nursery or kindergarten, and the child-related budget (kindgebonden budget).

• They are applied for via Mijn toeslagen and your income must be estimated accurately, since if the actual income is higher than estimated you may be asked to repay amounts.
• Report every change in your income, family or address at once.
• And avoid untrustworthy advisers who submit applications for a large percentage.

Qualified foreign workers recruited from abroad to the Netherlands may benefit from the 30 per cent ruling, a tax exemption on part of the salary (about 30 per cent) to compensate for costs of living outside your country, under precise conditions relating to minimum salary, scarce skill and not having lived near the Netherlands in the past.

• Its conditions, duration and percentage have changed over the years and have been gradually reduced, so check the current rules.
• The employer submits the application with you through the tax authority within three months of starting work for it to be retroactive.
• Ask payroll or a reliable tax adviser.

Other taxes include value-added tax (BTW) included in prices at 21 per cent for most and nine for food and some services, vehicle tax (motorrijtuigenbelasting), and municipal and water taxes as in the costs guide.

• If you discover a mistake in your return correct it quickly, or lodge an objection (bezwaar) to the assessment within six weeks.
• The tax authority offers a phone service for questions, and free help bodies exist for low incomes such as voluntary income help (Vrijwillige Inkomstenhulp) and support associations.
• Avoid unknown service providers, and do not enter DigiD details on suspicious sites, since fraudsters impersonate the tax authority with fake text messages.

When is the tax return season?