Understanding Dutch Income Tax

The three "boxes" of Dutch income tax

Why your income isn't taxed all in one place

The Netherlands splits your income into three separate "boxes," each with its own rules and rates. You add up the tax from whichever boxes apply to you: most employees and homeowners only ever deal with Box 1 and Box 3.

Box 1

Income from work and home: salary, benefits, self-employment profit, and your primary residence (mortgage interest deduction and the imputed rental value). This calculator covers Box 1.

Box 2

Income from a substantial interest: broadly, if you own 5% or more of the shares in a company (e.g. a Dutch BV). Not covered by this calculator; it rarely applies to salaried employees.

Box 3

Income from savings and investments: bank balances, stocks, funds, crypto, a second home, and other assets, minus debts. This calculator covers Box 3.

Box 1: work and home

2026 rates, credits and the 30% ruling

Box 1 tax is progressive: the more you earn, the higher the rate on each additional euro. For 2026:

€0-€38,883

35.75% (17.85% if you've reached state pension / AOW age: a lower rate applies because AOW recipients don't pay the national-insurance component)

€38,883-€78,426

37.56%

€78,426 and above

49.50%

Two credits then reduce the tax you actually owe: the general tax credit (algemene heffingskorting, up to €3,115) applies to everyone and phases out above roughly €29,736 of income; the labor tax credit (arbeidskorting, up to about €5,685) applies only to income from work and also phases out at higher incomes.

If you own your home, its WOZ value adds a small taxable amount (eigenwoningforfait), while your mortgage interest is deductible: for most people the deduction is larger than the addition, so owning a home usually reduces Box 1 tax.

Box 3: savings and investments

Tax-free allowance, and the two ways your return can be taxed

Box 3 only taxes wealth above a tax-free allowance (heffingvrij vermogen): €59,357 per person for 2026, or €118,714 combined for fiscal partners filing jointly. Below that, Box 3 assets aren't taxed at all.

Above the allowance, Box 3 tax is charged at a flat 36%. What counts as your "return" depends on which of two methods is used.

Fictitious return vs. actual return

The most confusing part of Box 3, and the calculator's method toggle

For years, Box 3 assumed everyone earned a fixed, government-set percentage return on their savings and investments: regardless of what they actually earned. This "fictitious" or notional return (forfaitair rendement) is still the default method today:

Bank savings & cash

1.28% assumed yield

Investments, 2nd home, other assets

6.00% assumed yield

Deductible debts (above the threshold)

2.7% assumed deduction

In December 2021, the Dutch Supreme Court (the "Kerstarrest") ruled that taxing people on a fictitious return higher than what they actually earned violated their property rights when the gap was large: for example, someone holding cash in a low-interest savings account was still taxed as if it earned 6.00%. A follow-up ruling in December 2024 extended this counter-evidence right (tegenbewijsregeling) to cover the full picture: interest, dividends, realized and unrealized gains, minus costs and debt interest.

In practice, this means that for recent tax years (including 2025 and 2026), you can choose whichever method results in less tax:

Notional / fictitious return

The default. Uses the fixed percentages above, applied to your asset balances on 1 January. Simple: no need to track actual gains or losses.

Actual return (werkelijk rendement)

You report what you genuinely earned: interest received, dividends, realized and unrealized capital gains, minus costs and debt interest. Requires more record-keeping, but can be significantly lower if your real returns underperformed the notional rates (e.g. cash sitting in a low- or zero-interest account).

DTAA: double tax relief on foreign assets

What it is, and how the Netherlands applies it

A Double Taxation Avoidance Agreement (DTAA), or tax treaty, is a bilateral agreement between the Netherlands and another country that stops the same income or wealth from being fully taxed by both countries. If you're a Dutch tax resident, you must declare your worldwide assets in Box 3. But if some of those assets are also taxed abroad (e.g. a property in your home country), the applicable treaty gives you relief here in the Netherlands.

The Netherlands applies relief in one of two ways, depending on the treaty and the type of asset:

Exemption method

The portion of Dutch Box 3 tax attributable to the foreign asset is removed entirely: the Netherlands effectively steps aside and leaves taxation to the other country.

Credit method

The Netherlands still taxes the asset, but reduces the Dutch tax by the foreign tax you actually paid on it (capped at the Dutch tax amount: you can't use it to create a refund).

In practice every Dutch treaty works the same way for Box 3: the country where real estate sits may tax it, so the Netherlands uses the exemption method for property, while bank accounts and securities stay taxable in the Netherlands and only get a credit for tax withheld abroad. The calculator applies this to all 56 listed countries (each with a treaty in force and 5,000+ residents in the Netherlands):

All 56 listed countries, from Argentina to Vietnam

Real estate: exemption | Other assets: credit

Countries without a treaty

Real estate: exemption (unilateral decree) | Other assets: credit at most

Inheritance tax (erfbelasting)

A brief overview: this calculator doesn't cover inheritance tax

Dutch inheritance tax applies to the worldwide estate of someone who was a Dutch tax resident when they died. Importantly, Dutch nationals also remain liable for up to 10 years after emigrating (the "10-year rule"). Rates and exemptions depend on your relationship to the deceased:

Partner

Exemption up to €795,156, then 10% up to €138,641 of the taxable amount and 20% above that.

Children & grandchildren

Children: exemption €25,187, then 10%/20%. Grandchildren: same exemption, but 18%/36%.

Parents

Exemption €59,643, then the "children" rates apply.

Everyone else

Exemption €2,658, then 30% up to €138,641 and 40% above that.

If you have assets or family both in the Netherlands and abroad, inheritance tax can get complicated fast: cross-border estates are a good reason to speak with a Dutch notary or estate-planning specialist rather than relying on general guidance.

Important dates

The filing calendar, year after year

1 March

The Belastingdienst opens online filing for the previous tax year via Mijn Belastingdienst.

1 May

Standard filing deadline for the previous tax year's income tax return (P-form).

Before 1 May

Request an extension (uitstel) online: if granted, your deadline moves to 1 September. A registered tax advisor filing on your behalf can typically arrange a further extension.

1 July

If you owe additional tax and haven't yet been assessed, belastingrente (tax interest) starts accruing on the amount owed: file on time or request a provisional assessment to avoid this.

Things expats should consider

• Apply for DigiD as soon as you have a BSN (citizen service number): you need it to log in and file online.
• If eligible, apply for the 30%-ruling promptly: it's typically backdated only if requested within 4 months of your start date.
• File an M-form (not a P-form) for the calendar year you arrive in or leave the Netherlands.
• As a Dutch tax resident, you must declare worldwide income and assets, not only what's earned in the Netherlands.
• Check whether you and your partner qualify as fiscal partners: joint filing can shift deductions to whichever of you benefits most, often lowering the combined tax.
• A provisional assessment (voorlopige aanslag) is an estimate, not a final bill: always compare it against your actual year-end filing.
• Keep records of foreign tax paid on overseas property or investments to support a DTAA claim.
• For Box 3, compare the notional and actual-return methods before filing: whichever is lower is worth the extra paperwork.

Useful websites & contact numbers

belastingdienst.nl

The Dutch Tax and Customs Administration: official rules, forms, and Mijn Belastingdienst login.

digid.nl

DigiD: the digital ID you need to log in to Dutch government services, including tax filing.

mijnoverheid.nl

MijnOverheid: your official government mailbox and overview of personal records.

government.nl

Government.nl. English-language overviews of Dutch tax and administrative topics.

ind.nl

Immigration and Naturalisation Service (IND): residence permits and visa matters.

0800-0543

BelastingTelefoon: free tax information line, calling from within the Netherlands (Dutch-language only).

+31 55 538 5385

Tax information line for non-residents: calling from abroad (Dutch-language only).