Apart from the Dutch allowances, there are two tax breaks that many expats could be eligible for:
General tax credit (algemene heffingskorting)
The general tax credit is a tax break on your income tax. The amount you are entitled to depends on your income level. In 2023, the credit amounts for people not yet at retirement age are:
- €3.070 for those with a taxable income under €22.261.
- €3.070 - 6,095% x (taxable income - €22.660) for people with an income between €22.661 to €73.031.
- €0 for people with an income over €73.031.
Depending on one's income level, everyone in the Netherlands is entitled to the general tax credit, including expats. The tax credit is calculated and credited to your tax balance on your salary by your employer, so it is not necessary to do anything to receive it.
People who are retired are eligible for a reduced general tax credit, ranging from €1.583 down to €0 as income increases.
Labour tax credit (arbeidskorting)
Every working person in the Netherlands is entitled to receive the labour tax credit (arbeidskorting or loonheffingskorting). Like the general tax credit, the labour tax credit is calculated by your employer and applied to your salary, so you receive it automatically. If you work for yourself then the tax credits are calculated when you complete your annual tax return.
The value of your labour tax credit depends on how much you earn. In 2023, labour tax credit is calculated as follows for people not yet at retirement age:
- €0-€10.741 income = 8,231% x income (arbeidsinkomen)
- €10.741-€23.201 income = €884 euros + 29,861% x (income - €10.740)
- €23.201-€37.691 = €4.605 + 3,085% x (income - €23.200)
- €37.691-€115.295 = €5.052 - 6,510% x (income - €37.690)
- €115.295 = €0