Nonresident individuals are liable to pay tax on income from sources in Netherlands. Married couples are taxed separately for their earned income in past or present employment while income from other sources may be freely attributed to one spouse. Spouses living permanently apart are taxed separately on all income. Income of the children is taxed in the hands of the parent who maintains the children.
Taxable income under Box 1 category includes (1) past and present employment, (2) business activities, (3) other activities (cannot be considered employment or business), (4) periodical payments and pensions from individuals (e.g. alimony) or insurance institutions, (5) periodical payments received from the state and other public institutions (e.g. old-age pension), and (6) owner-occupied dwellings. Income from all sources mentioned is aggregated before deductions and tax credits are deducted. Income is then taxed at progressive rates.
INCOME TAX 2016
|TAXABLE INCOME, |
|Up to 19,922||36.55%|
|19,922 - 33,715||40.40% on band over 19,922|
|33,715 - 66,421||40.40% on band over 33,715|
|Over 66,421||52% on all income over 66,421|
|Source: Global Property Guide|
Included in the tax rates for the first two tax bands are national social security contributions, which is 28.15%. The actual income tax rates for the first two tax bands are 8.40% and 12.25% respectively. The tax rates for the last two tax bands do not include any national social security contributions.
If a property is rented out, the taxation will take place in Box 3 at flat rate of 30% based on the assumption that a taxable yield of 4% is made on the net assets. The effect is an annual tax of 1.2% on the value of the assets.
No capital gains tax is levied on the profits realized on the sale of Dutch real estate owned by a non-resident individual unless the non-resident is engaged in a trade or business in the Netherlands and the real estate is one of the capital assets of the business. If sale of real estate is part of a business enterprise, capital gains are taxed as part of income in Box 3 at a flat rate of 30% on the deemed yield of the asset.
Besides real estate taxes, municipal authorities levy other taxes and charges such as building charges that are related to building permits. Such charges can be very high so a critical review is advised before payments are to be made.
Other possible taxes include polder board taxes orland-draining rights, wastewater pollution tax and sewage system tax, sufferance tax, refuse matter tax, groundwater tax, ecological taxes and the energy tax. These taxes and their rates vary from municipality to municipality, so consultation with makelaar or notaris is necessary.
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