Income tax (IB) on income from employment and property (Box 1) is levied at a progressive rate. Up to an income of €19,645 (the first tax bracket) in 2014, 36,25% payable to the tax authorities. Above that, up to an income of €56,531: 42%, and above that: 52%. The rate in the first two tax bands consists of a tax component and a contribution component. The tax component amounts to 5,1% and the contribution-based part 31,15%, which together make up the rate of 36.25% mentioned above. The second tax bracket ranges from an income of €19,645 to €33,363 and has a tax rate of 10,85%, which, when combined with the contribution-based portion of 31,15%, results in the rate of 42% already mentioned above (for incomes between €33,363 and €56,531, the rate is – 42% – consists solely of income tax).
Adopted by the Senate on 2 December 2014 Long-Term Care Act (Wlz), which replaces the General Act on Exceptional Medical Expenses (AWBZ), the income tax rate in the first two tax brackets will be increased by 3% points. At the same time, the contribution component will be reduced by 3% points. For most tax and contribution payers, therefore, nothing will change. However, those who pay income tax only will see the rate rise significantly: from 5.1%/10.85% to 8.1%/13.85%. Conversely, those who pay contributions only will see the rate fall (from 31.15% to 28.15%).
The only people liable for tax in the Netherlands are mainly foreign workers who work in the Netherlands but are still covered by social security schemes in their country of residence. They often hold a so-called A1 certificate, in which their country of residence certifies that they are covered by social security schemes there. From 2015 onwards, if their Dutch income from work and housing amounts to €33,363 or more, they will pay €1,000 more in income tax compared with 2014 (3% * €33,363 = €1,000).
Only Dutch nationals who work abroad but remain insured in the Netherlands are required to pay social security contributions. In 2014, they will pay up to €1,000 less in contributions.
The figures mentioned above relate to the 2014 tax year. The exact rates for 2015 are not yet known.