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 2017 the credit amounts for people not yet at retirement age are:
- 2.254 euros for those with a taxable income under 19.982 euros.
- 2.254 down to 0 euros (sliding scale) for people with an income between 19.982 to 67.068 euros.
- 0 euros for people with an income over 67.068 euros.
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.
Partners are entitled to the benefit individually, you can make use of your partner’s tax credit if they have an income that is roughly lower than 6.000 euros. People who are retired are eligible for a reduced general tax credit, ranging from 1.151 down to 0 euros 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 2017 the maximum labour tax credit is 3.223 euros (applicable to annual income between 20.108 and 32.444 euros) and reduces on a sliding scale down to 0 for annual income above 121.972 euros.