Knowledge Base
Tax rates in the Netherlands 2021
Rate Box 1 (income from work and home)
The rate in Box 1 is a combination of tax and premiums social security. Premiums social security are calculated in the first bracket. On your payslip or year end statement you may see something like: “ingehouden loonheffing” or “LB/PR. VOLKSVZ” where LB stands for wage tax and PR. VOLKSVZ for premiums national insurance or premiums social security.
If you are not insured in the Netherlands but in the country where you were transfered from (based on a A1 declaration or Certificate of Coverage) then you don’t pay premiums social security in the Netherlands thus reducing the amount which is withheld from your salary of freelance income.
For the year 2021 the tax rate and premiums for income from work and home are:
Combined rates in Box 1 for persons younger than retirement age
| Taxable income | Tax per bracket | Premium National Insurance per bracket | Total rate | |
| From | up to and including | |||
| € 0 | € 35,129 | 9.45% | 27.65% | 37.10% |
| € 35,130 | € 68,507 | 37.10% | 0% | 37.10% |
| € 68,508 | 49.50% | 0% | 49.50% |
National insurance premiums (premiums social security)
Total premium for the national insurance is 27.65% which is divided in:
- AOW (General Old-age Pensions Act ): 17.9%
- ANW (General Surviving Relatives Act): 0.1%
- Wlz (Act on long-term care): 9.65%
Rate Box 2 (income from a substantial interest in a limited company)
For the year 2021 the tax rate for income from a substantial interest is 26.90%.
Rate Box 3 (income from savings and investments)
The tax rate for income from savings and investments is increased to 31%. Expats with the 30% ruling can opt in the tax return to be exempted from taxation on savings and most of the investments.
Tax credits
After the tax has been calculated based on the above percentages you can reduce the calculated amount with the applicable tax credits.
- Personal tax credit (max for lower incomes) € 2,837
- Personal tax credit (max for incomes above € 68,507) € 0
- Personal tax credit for partner without income born after 1 January 1963 € 379
- Personal tax credit for partner without income born before 1 January 1963 € 2,837
- Labour tax credit (max for lower incomes) € 4,205
- Labour tax credit (max for incomes above € 68,507) € 0
If you have children additional tax credits can apply. There are also other specific tax credits depending on your situation but the above are the common tax credits.
Tax return
Do you need help with your Dutch tax return? Expatax can help you. You can also find more information about the Dutch tax system on our website.
there is a wrong in combined rates tax box1 ‘tax per braket’
Hi Carlo, you are right! Thanks for adressing the missed adjustment. I have corrected it. Combined tax rate was correct, but the table still mentioned the 2020 tax per bracket.
Hello what’s the difference between people who earn less than 35129€ per year and still they will have to pay 37.10% tax on par with those who earn above 35130 – 68507€
The total rate was 37.10 in both brackets, so that is the same. Difference is only that in the first bracket social insurance premiums are included. In the second bracket the 37.10 is only tax.
Hello, when and where can I find the tax rate tables for 2022. Thank you
Carlo
Your can find them on https://expatax.nl/tax-rates-in-the-netherlands-2022/
Do freelancers working for various companies worldwide have to pay social security premiums? If not, do they only need to pay 9.45% tax if their total income fall in the first bracket? I am also aware of the tax treaties between countries.
Premiums social security are in principle paid in the country where you live. If you work outside the Netherlands it depends how, where and how long whether you would have to pay premiums social security in another country. But as a freelancer, who is based in the Netherlands with clients worldwide – so that none of the countries could claim you have a close link with their country – your bond with the Netherlands is as such that you would pay premiums in the Netherlands.
Dear,
so 37,10% belastingtarief is always the same untill 68, 507€, only what is channged is amount of income? 35k,40k,45k 55k,..
so 37,10% is fixed?
Yes, there are essentially only 2 brackets left with each a fixed rate. That indeed means that if your income is 35k or 45k, the tax rate is 37.10% (in 2021). Due to applicable tax credits the effective tax to be paid will be lower. If you are transfered to the Netherlands and remain insured for national insurance in the other country and have an A1 certificate or other certificate of coverage then you don’t pay premiums so the actual rate in the first bracket will be lower (only tax).
Why does someone who makes 10 000 a year pays the same as someone who makes 50 000 a year? Makes absolutely zero sense. I understand now why this country has the highest percentual wealth inequality in the world.
The rates are indeed the same but the tax credits which reduce the calculated tax are not. These credits reduce gradually when the taxable income increases. The higher the taxable income the lower the tax credits and the more net tax is paid. And there are other arrangements which make the tax consequences for higher incomes less beneficial.