Tax Rates Imposed on Individual Payer in Netherlands
You can have three types of taxable income: in Box 1, in Box 2 and in Box 3. You calculate the amount of tax you owe by applying the tax rates to these taxable incomes.
The tax amount you calculated on the basis of the tax rates should subsequently be reduced by one or more tax credits. This is because all taxpayers are entitled to a general reduction of the tax owed: the general tax credit. In addition, you may qualify for supplementary tax credits, depending on your personal situation. For more information, please refer to Tax credits 2008.
Tax rate for income from employment and home ownership (Box 1)
The rate for income from employment and home ownership is a progressive rate that is charged over four ‘brackets’. As a result, you will pay a proportionally higher amount of tax as your income increases. The following table shows the brackets and the corresponding tax rates in 2008.
| Bracket | Taxable income from employment and home ownership | Income tax rate |
|---|---|---|
| 1 | up to € 17,579 inclusive | 2.45% |
| 2 | € 17,579 to € 31,589 inclusive | 10.70% |
| 3 | € 31,589 to € 53,860 inclusive | 42.00% |
| 4 | € 53,860 and more | 52.00% |
If you are also insured under the statutory pension insurance (AOW), surviving dependants’ pension insurance (ANW) and exceptional medical expenses insurance (AWBZ) schemes, you will also pay national insurance contributions on the Box 1 income. These contributions are owed on the taxable income in Box 1 up to € 31,122 inclusive (in 2008). The percentage for national insurance contributions (AOW, ANW and AWBZ) is 31.15. If you are 65 or older, the percentage will be 13.25. For more information, please refer to The levy of national insurance contributions.
Tax rate for income from a substantial interest (Box 2)
The income from a substantial interest is taxed at a fixed rate of 25%.
Tax rate for income from savings and investments (Box 3)
The income from savings and investments is taxed at a fixed rate of 30%.
