Understanding taxes in the Netherlands: What every expat should know

Moving to the Netherlands means lots of new things: a new job, a new house, and new friends! Less excitingly, it also means a new tax regime to wrap your head around. 

The system in the Netherlands isn’t necessarily more complex than in other countries, but it’s definitely different. Whether you’re planning your move to the Netherlands or have recently arrived, here are six tax-related hurdles many expats face – and how to deal with them.

1. Tax residency: More than just BSN

Acquiring a burgerservicenummer (BSN) is an essential administrative step, but it doesn’t automatically make you a tax resident. Tax residency is determined by various factors, including your permanent home, employment and personal ties to the country.

If you intend to live and work in the Netherlands, you may be considered a tax resident from the moment of immigration. Make sure you know your tax residency, especially if you will be splitting your time between two countries.

2. What to declare – and where?

For expats, tax declarations can become complicated quickly. Maybe you’ve got income from your home country. Are you renting out your home abroad? Or maybe you’ve opened a savings or investment account elsewhere before moving here.

The Dutch tax system requires you to declare all sources of income – even foreign ones – if you’re considered a tax resident. Non-residents with Dutch income must also file, though in a more limited way. And yes, double taxation is a risk, though treaties between countries often prevent this. Still, understanding what counts as taxable and how to report it properly is crucial.

3. The 30% ruling: Not automatic, not forever

Many expats have heard of the 30% ruling, a tax advantage for highly skilled migrants. If eligible, you can receive up to 30% of your salary tax-free for a set number of years. It sounds generous – and it is! But there’s a catch: you must apply for it, and it’s not always granted.

There are conditions, such as having to be a minimum distance from the Netherlands before employment, specific salary thresholds and a maximum duration for which you can receive it (which has recently been reduced from 8 to 5 years).

It's also worth noting that the ruling doesn’t apply retroactively, so the sooner you look into it, the better.

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4. Deductions and allowances: Often overlooked

A lot of expats miss out on legitimate tax benefits simply because they don’t know they exist. For example, if you pay interest on a Dutch mortgage, some or all of it may be deductible. Costs for charities or annuity premiums can sometimes be claimed as deductions, but the rules are nuanced, and not everything is covered.

On top of that, there are various toeslagen (allowances) like healthcare or childcare support, which are based on income. If you’re not aware of them, or you think they don’t apply to you, you could be leaving money on the table.

5. DigiD and Dutch: Practical barriers

Let’s be honest: the Dutch tax authorities (Belastingdienst) are efficient, but their systems can be intimidating. Most communication is digital, and nearly all of it is in Dutch.

You need a DigiD - a digital ID that allows you to log in to government services - to file online, view tax assessments or request changes. These are free and used for lots of different official services, so once you have your BSN, make sure you set yours up.

6. The M-form: Your first Dutch tax return

If you moved to the Netherlands partway through the year, your first tax return will likely be done using the so-called M-form (short for “Migration form”). This special return form is more detailed than the standard one and accommodates your partial year of residency.

It asks for details regarding your move to or from the Netherlands, as well as any foreign income or assets. Unlike regular tax returns, the M-form isn’t initially available online in English, although it can now be completed digitally or with the help of a tax advisor.

Submitting the M-form is often essential to claim refunds or properly declare global income, so don’t skip it.

Need a hand?

Taxes don’t have to be terrifying. Whether you’re new to the Netherlands or have been here for a few years, getting your finances right is possible – and can save you money. With the right guidance, including a bank that’s used to working with internationals, you can focus on exploring the rich culture, vibrant cities and beautiful landscape that awaits you.