Changes in Taxation in the Netherlands in 2024 for Immigrants and Dutch Citizens – Tax Brackets, Rates, and Deductions

Most of us are familiar with the famous words of Benjamin Franklin, that in life only two things are certain. And unfortunately, one of them is the use of taxes. This is also the case in the Netherlands, an open and immigrant friendly country, where people that are willing to work hard, are still in demand. So if you work, or plan to work, in the Netherlands, see here which tax changes have occurred in 2024. Learn about tax brackets, rates, and the most important deductions and benefits, to lower your income tax.

Tax System in the Netherlands – Basic Information about Taxes

The Netherlands is not the country with the lowest taxes in Europe. However, various tax breaks and ways to save income, as well as a not too complicated tax system, make the Netherlands still one of the most popular immigration destinations. For Polish people and other migrants

Anyone earning income in the Netherlands, must account for the money they receive. The institution responsible for this is the Dutch Tax and Customs Administration, also known as Belastingdienst. Sanctions are provided for those, who do not fulfill their tax obligations. So it is worth taking care of correct and timely settlements, to avoid unpleasant consequences. This requires a set of documents and information, including the BSN identification number.

The Dutch tax system distinguishes three types of taxpayers, which it divides into so-called “boxes”. The amount of tax depends, among other things, on membership in a given group.

• Box 1 includes the largest group of taxpayers, including individuals receiving remuneration under an employment contract, lease agreement, freelancers, and individuals running their own businesses, e.g., as ZZP (Zelfstandige Zonder Personeel) – a popular form for self-employed persons in the Netherlands. This group usually includes Polish people coming to the Netherlands to work.
• Box 2 concerns taxpayers earning income from participating in companies.
• Box 3 consists of taxpayers who derive income, mainly from savings (e.g., in a bank deposit) and investments.

Tax returns that apply in the Netherlands equally affect both Dutch citizens and foreigners. Interestingly migrants may be entitled to various tax breaks, e.g., the "30% tax ruling". In a large simplification, this is an allowance for qualified foreign workers, with specialized knowledge, that is not available on the Dutch labor market, or is difficult to access there.

Tax Changes in the Netherlands 2024

The year 2024 brought a number of changes in the Dutch tax system. So check which ones will affect you.

• In the Netherlands, there are currently only two, not (as until recently) three tax brackets. If your income is up to 75,624 euros per year (73,031 euros in 2023), you will pay 36.97% income tax (in 2023 it was 36.93%). Above this amount, you enter the second tax bracket, and your income tax is 49.5%.
• Importantly, you will not pay the higher tax rate on your entire income, but only on the excess over 75,624 euros. For example, with an income of 95,624 euros per year, 75,624 euros will be taxed at a rate of 36.97%, while the next 20,000 euros will be taxed at a rate of 49.5%.
• Do you earn income from participating in a company (box 2)? In 2024, new tax rates apply in the Netherlands – 24.5% for incomes up to 67,000 euros (up to 134,000, when having a tax partner) and 33%, for incomes above that amount.
• Do you have accumulated savings (box 3)? If they are up to 57,000 euros, you do not pay tax. Above this limit, you have to share the savings income with the tax authorities. In case of having a tax partner, the threshold is 114,000 euros.
• As of January 1, 2024, the tax on savings income has increased, from 32% to 36%.
• The employee tax credit (arbeidskorting), which is due to every person working legally in the Netherlands, was increased to a maximum of 5,532 euros in 2024.
• As of January 1, 2024, only the hourly minimum wage applies. It is the same for all employees aged 21 and over. The current minimum hourly wage is 13.27 euros.

Additional Tax Changes in the Netherlands 2024 for Entrepreneurs

If you run a business in the Netherlands, familiarize yourself with the most important changes in the tax system in 2024 for entrepreneurs.

The SME allowance, i.e., a special tax exemption for individuals running their own businesses and for small and medium-sized enterprises, has been reduced from 14% to 13.31%. This means a higher tax burden, especially for entrepreneurs with higher incomes.

The deduction for self-employed persons decreased from 5,030 euros in 2023 to 3,750 euros in the current year. Self-employed individuals, will pay more to the tax authorities, than in previous years. Gradual further reductions are planned. In 2027, the deduction is going to be only 900 euros.

In 2024, the allowance for a one-time payment of advance income tax was abolished. Until 2023, taxpayers who paid tax for the whole year in the first term, were entitled to additional tax relief.

The rate of the so-called "kilometre allowance”, i.e. the tax-free amount for travel (to and from work), has increased from 0.21 to 0.23 euros per kilometer. Entrepreneurs can deduct travel costs by car, plane, or bicycle from their profit. In the case of employed workers, travel costs reimbursed to them are tax-exempt, up to the above-mentioned rate.

The method of settling the public transport card (‘ov-kaart’) for employees has been simplified. From this year onwards, the employee does not have to pay tax on the card refund. The condition, however, is usage of the card, only for business purposes.

Excise duties on alcohol and non-alcoholic beverages, e.g., fruit juices, have increased.

Tax Changes in the Netherlands in 2024 in Deductions and Additional Benefits Worth Knowing

The Dutch tax system offers various types of tax credits and deductions in the Netherlands 2024, which allow for significant tax relief. So check out what has changed, compared to the previous year.

Zorgtoeslag – health insurance subsidy has been reduced to 123 euros per month per person and 236 euros for two people.

Huurtoeslag – rent subsidy where the limit of rent payment has increased to:

– 454.47 euros per month for individuals aged 18 to 23,

– 879.66 euros per month for individuals aged 23 or older.

Kindgebonden budget - child allowance increased to:

279.49 euros (children up to 5 years old),

339.38 euros (children aged 6-11),

399.27 euros (children aged 12-18).

Fines for traffic violations have increased.

The rules for the 30% tax ruling have been changed.

As you can see, there are many tax changes in the Netherlands in 2024. This may cause uncertainty and concern, about the level of your own income. Do you know how to increase your earnings and secure your future?

One of the best ways to make more money is to acquire new professional qualifications and credentials that will increase your attraction to employers. That's why at Bonapi, we have a wide range of training offerings. Thanks to them, you can quickly and easily pass courses, pass exams, and gain not only legal certificates, but also proven theoretic and practical knowledge, that you can immediately apply in the workplace.

So don't hesitate and choose a course with us today, that will open the door to a more favorable and better-paying job.