MFFA Tax Advice

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Dutchincometax/socialsecurityForemployersandemployees

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Content:Content:1. Personalincometax 61.1 Taxableincome 61.2. Investmentsandsavings 61.3 Availabletaxreductions 61.4 Filinganincometaxreturn 61.5 WithholdingTax 62 Payrolltaxes 72.1 Taxonincome 72.2 Rates2014 82.3 Levyrebates 82.4 Extraterritorialexpensesforexpats 92.5 Category1:taxexemptforallemployee's 102.5.1 Costsforrelocation 102.5.2 Relocationcostsonterminationofassignment 102.5.3 Doubleaccommodationcosts 112.5.4 Jobinterviewtrips 112.5.5 Furniturecostsstoring 112.5.6 Costsregardingofficialdocuments,medicalexaminations,

vaccinationsforworkpermits 112.5.7 Costfortravellingfromhometowork 112.5.8 Meals 122.6 Category2ETcosts:taxexemptforexpats 122.6.1 Costoflivingallowance 12

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2.6.2 Costofstoringfurniture 132.6.3 Additionalcostoffurniture 132.6.4 Doublehousingfornonresidentexpats 132.6.5 ExpatsRegularhousing 142.6.6 Water,power,gasandotherutilities 142.6.7 Costsforhousehunting/acquaintancetrips 142.6.8 Costsrelatingtohomeleave/familyreunion 142.6.9 Costsforlanguagecourses 142.6.10 Coststelephone 142.6.11 Costsregardingofficialdocuments,

medicalexaminations,vaccinationsforprivatepermits 152.6.12 Costsforinternationalschool 152.7. Category3:taxablereimbursementsandallowances 152.7.1 Reimbursementexpenseshousepurchase/broker'sfee 152.7.2 Foreignservicepremium/expatallowance/overseasallowance 152.7.3 Lossesincurredbecauseofthesaleofassetsduetotheassignment 152.7.4 Coststaxadvisory 152.7.5 Taxequalization 153 Incometaxsystem 163.1 Taxpayers 163.2 Taxbasetaxrates 163.3 Taxdeductions(personal) 173.4 Rates2014 173.5 Levyrebate 183.6 Box1incomeworkandowneroccupiedhouse 18

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3.7 Mortgageinterestdeductible 193.8 Box2substantialinterest 193.9 Box3Incomefromsavingsandinvestments 193.10 Personalincometaxreturn 203.11 InternationaltaxresidentsNetherlands 213.12 Doubletaxationavoidanceresidenttaxpayers 213.13 MethodsAvoidance 213.14 Exemptionmethod 213.15 Creditmethod 223.16 Costsdeduction 224 Capitaltax 234.1 Wealthtax 234.2 Realestatetax 235 GiftTaxInheritancetax 245.1 Taxablebase 245.2 AllowancesPersonal 245.3 ReliefofDoubletaxation 256 Othertaxes 266.1 VAT 266.2 VAT6% 266.3 VATzerorate0% 266.4 Excisedutiesconsumptiontaxes 266.5 Crossborderofgoods 276.6 2%transfertax 276.7 Passengercarsandmotorcycles 27

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6.8 Usedcarsandmotorcycles 286.9 Taxonmotors 286.10 Taxontheenvironment 286.11 Taxongroundwater 286.12 Taxontapwater 286.13 Wastetax 296.14 Fueltax 296.15 Energytax 296.16 Importduty/customsduties 297 Socialsecurity 317.1 Employeessocialsecurityschemes 317.1.1 Unemploymentbenefit('Werkloosheidswet,WW") 317.1.2 Sicknessbenefit("Ziektewet,ZW") 317.1.3 Disabilitybenefit("Wetwerkeninkomennaararbeidsvermogen;WIA) 317.2 HealthInsuranceAct("ZorgVerzekeringsWet,ZVW") 328 Pensions 33

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1. PersonalincometaxFortheyear2014,theDutchpersonalincometaxrateismax.52%.Thisrateappliestoincomewhichexceeds55.991.Upto19.645theincomeistaxedat37%,between19.645to33,363at42%andbetween33.363to55.991at42%.TheseamountsareincludingDutchsocialsecuritycontributions.1.1 TaxableincomeTheincomewhichhasbeenreceivedbyanindividualissubjecttoDutchincometax.TheincomeanindividualreceivesissubjecttoDutchpersonalincometax.AnyDutchpayrolltaxalreadywithheldontheincomewillreducetheamountofDutchpersonalincometaxpayable.1.2 InvestmentsandsavingsSavingsandinvestmentsaresubjecttoapersonalincometaxof1,2%(2014)ofthefairvalue.ThefairvalueofsavingsandinvestmentsareallworldwideassetsminusliabilitiesforthevalueatJanuary1st.Thefirst21,139(for2014)isexempt.ExpatslivingintheNetherlandandwhohavethe30%taxrulingcanoptoutandbetaxedasadeemednonresident.1.3 AvailabletaxreductionsIntheNetherlandsseveraltaxreductionsareavailable.ForexamplethereisataxreductionavailablewhenyouliveandworkintheNetherlandsorwhenyouareconductingastudy/training.1.4 FilinganincometaxreturnDutchpersonalincometaxreturnsmustbefiledintheNetherlandswithin3monthsafteracalendaryear(anextensioncanberequested).1.5 WithholdingTaxThereisnowithholdingtaxoninterestnoronroyalties.Thereisonlya15%dividendwithholdingtax.

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2 PayrolltaxesResidentandnonresidenttaxpayerswhoearnemploymentincome,aresubjecttoDutchwagetaxandsocialsecuritypremiums.EmployersorentitiesthatpaysthewageswithholdsthewagewithholdingtaxandpaysitperiodicallytotheDutchTaxAdministration.Thewagewithholdingtaxconsistsofoneamountmadeupofwagetaxandsocialsecuritycontributions.SocialsecuritycontributionsmustbepaidfortheOldAgePension(AOW),GeneralSurvivorsPensionAct(Anw),HealthInsuranceContributionAct(ZVW).IndividualsworkingintheNetherlandsgenerallyhavesocialsecuritycoverageandmustthereforepaysocialsecuritycontributions.Anexceptiontothismay,forexample,applyintheeventof(temporary)secondment(A1statement).Those,whowithholdthetaxesandcontributionsisknownasthewithholdingagent;thisisthepartythatfilesthewagewithholdingtaxreturn.Thepartyfromwhosewagesorallowancesthedeductionsarewithheldisknownasthe(deemed)employee.Thewagewithholdingtaxisanadvancepaymentfortheincometax.Inthiswayitispreventedthattaxpayershavetopayasinglelargepaymentforincometaxandsocialsecuritycontributionsonceayear.Thewithholdingagentwithholdsthewagewithholdingtaxatthetimetheemployeereceiveshiswage.2.1 TaxonincomeEmployeesmustpaywagewithholdingtaxandsocialsecuritycontributionsontheirincomeorbenefits.Theemployermustwithholdandpaythewagetax.Employersandemployeesmayelectvoluntarilytodesignatetheirrelationshipforwagetaxpurposesasemployment.TheymustbothgivenotifythistotheTaxAdministration.Thewagewithholdingtaxhastobecalculatedonallremunerationsanemployeereceivesonthebasisofhiscurrentorformeremployment.Anexampleofincomefromformeremploymentispaymentofapension.Taxisalsopayableonotherbenefitpayments,e.g.OldAgePension(AOW).Theprincipalformsofwagesarewagesincash:salary,holidayallowance,overtimepayment,commissions,annualbonus,and

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anythingelseanemployerpaysincashtoanemployeewhichisdeemedtoberemunerationforhiswork.Butthereareotherformsofwagesaswell,suchasremunerationinkind,claimsand(free)reimbursementsandfacilities.Remunerationinkindisincomethatisnotpaidinmoney,butinsomeotherway,forinstanceaholidayoracamera.Aclaimisanentitlementtoreceiveabenefitorfacilitiesafterasetperiodoftime,orsubjecttoconditions.Anexampleofthisisentitlementtopension.Examplesoffacilitiesaretools,mealsorticketsforpublictransport.Freereimbursementsareamountsanemployerpaysanemployeetocovercoststheemployeeincursinordertobeabletoperformhisworkproperly.Nowagewithholdingtaxneedstopaidonpaymentsmadebytheemployertotheemployeewhichaccordingtothegenerallyheldview,arenotseenasremunerationforservicesprovidedortobeprovided.Ifallowancesinkindmaybeissuedtaxfree,theymayusuallybereimbursedtaxfreeaswell.Examplesincludeprofessionalliteratureorworkclothing.Afreereimbursementorfacilityofthiskindisnotdeemedtobepartoftheincome.Reimbursementsorprovisionsmayalsobepartlyexemptfromtax.Forinstance,paymentofspecifictravelexpensesuptoagivenlimitmaybeconsideredtaxexempt.Thepartoftheprovisionorreimbursementthatisnottaxfreeremainssubjecttotax.2.2 Rates2014Therateofwagetax,apartofthetaxableincomefromwork,concludedthefollowing: Bracket1:37%taxandsocialsecuritycontributionsonthefirst19.645(5,85%taxand31.15%socialsecuritycontributions). Bracket2:42%taxandsocialsecuritycontributionsonthenext13.718(10.85%taxand31.15%contributions). Bracket3:42%taxonthenext22.628 Bracket4:52%taxontheexcess(over55.991).2.3 LevyrebatesWhendeterminingwagewithholdingtax,theemployertakeslevyrebatesintoaccount.Amongotherthings,theseconsistofageneralrebateandemploymentrebate.Thesearegeneralcreditsthatapplytoallemployees.Thegeneralrebatecomprisesataxelementandasocialsecuritycontributionelement.

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EntitlementtothecontributionelementofthegeneralrebateappliesonlyiftheemployeehascompulsoryDutchsocialsecuritycoverage.Theemployermaynottakeintoaccountanyallowancesanddeductionsthatarelinkedtotheemployeespersonalcircumstances.Toavailhimselfofpersonaldeductions,anemployeemustfileanincometaxreturn.Forsomeemployees,wagewithholdingtaxisthefinaltaxbecausetheyhavenoothersourcesofincomeandarenoteligibleforpersonaldeductionsandtaxdeductibleitems.2.4 ExtraterritorialexpensesforexpatsBelowyoufindinformationwhichisbasedonapublicationoftheDutchSecretaryofState(February2004nr.CPP2003/641M)whichprovidesclarityinrelationtothequestionofwhichcostsqualifyasexpatriateexpenses(hereinafterreferredtoas'ETexpenses').Asyouareawareemployeesqualifyingforthe30%rulingcanreceiveafixedtaxexemptexpenseallowanceof30/70oftheirgrosssalary.ETexpenseallowancespaidseparatelyaredeductedfromthefixed30%rulingallowanceincash.Therefore,employeesqualifyingforthe30%rulingcanexperienceadverseconsequencesifagivenexpenseallowancequalifiesasareimbursementofETexpenses.Ineverysituationyoushouldinvestigatewhichofthefollowingtypeofcostsyouaredealingwith: category1:costswhichcanbereimbursedtaxexemptforallemployees(regardlesswhetheranexpatornot).Theseallowanceswillnotdecreasethetaxfreeamountpaidtoexpatsunderthe30%ruling; category2:ETexpenses:

o 2a:itwasdecidedtogranta30%rulingallowance(30%ruling);oro 2b:theexpatdoesnotqualifyforthe30%rulinganditwasdecidedtoreimbursethe

actualETexpenses. category3:allowanceswhichcannotbepaidtaxexemptanddonotqualifyasETexpenses.TheseallowancesandreimbursementsaretaxableincomeforDutchtaxpurposes.Cafeteriasystemforexpatswhocannotqualifyforthe30%rulingViaacafeteriaagreementtheemployerandexpatcanagreethatETexpensesoftheexpatareconvertedfromgrosssalaryintoataxexemptreimbursementbyreducingthegrossagreedsalarywith

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extraterritorialcoststheexpatincurs.Thiscanbeaninterestingopportunityincasethe30%rulingcannotbeapplied.Beawarethatthisiscarefullydocumentedandthatyouaskforadvicetoimplementacafeteriascheme.Belowwewilloutlinethemostrelevantpossibilitiesinmoredetail.2.5 Category1:taxexemptforallemployee'sThesecostscanbepaidorreimbursedtaxfreeandareallowedinadditiontothe30%rulingallowance.2.5.1 CostsforrelocationThisallowanceiseffectivelyexemptfromtaxforemployees,providedthattherelocationisbusinessrelated.Thismeansthatataxfreeallowancetocoverrelocationcostsisallowedinadditiontothe30%ruling.Pleasenotethattherearesomerestrictions(theallowanceismaximizedattheactualcostsofmovingthefurnitureplus7.750).2.5.2 RelocationcostsonterminationofassignmentTheMinistryofFinanceallowsanemployertopayataxfreerelocationallowanceforanemployee'srelocationbacktothecountryoforiginwhenanassignmentterminatesunderthefollowingconditions:

Therelocationsuponcommencementandterminationoftheassignmentareofacrossbordernature.

Theemployerhasawardedtheallowancenolaterthanuponcommencementoftheassignment. Ifanemployeealsoreceivesarelocationallowancefromanotheremployeruponterminationof

hisorheremployment,heorshedeclarestotheemployerthatthiswillbereportedtothecompetentwithholdingagent;theemployeewill,therefore,notbeentitledtotherelocationallowance.

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2.5.3 DoubleaccommodationcostsDutchaccommodationcostsforanexpat,whohasbecomeaDutchresidentandwhocontinuestoownorrentthehouseinthehomecountry,qualifyasregularexpensesthatcanbepaidorreimbursedduringthefirst24(twentyfour)months.2.5.4 JobinterviewtripsCostsincurredbyanemployeewhiletravelingtothecountryofemploymentwithinthescopeofgettingacquaintedwiththecompanymayalsobereimbursedfreeoftaxtoanexpat.Wenotethat,justlikeinthesituationofaDutchemployee,thefocusshouldbeongettingacquaintedwiththecompanyinordertoqualifyforcategory1.2.5.5 FurniturecostofstoringCostsincurredforthetemporarystorageofhouseholdeffectswhileawaitingfinalaccommodationqualifyasrelocationcostswithinthemeaningoftheDutchWagesandSalariesTaxAct(category1).Thesecostsaretreatedastransportationcostsandcantherefore,alsobereimbursedfreeoftaxtoemployeesqualifyingforthe30%ruling.2.5.6 Costsregardingofficialdocuments,medicalexaminations,vaccinationsforworkpermitsCostsincurredinapplyingfororlegalisingofficialdocuments,e.g.residencepermits,visasanddrivinglicenses,aswellascostsofmedicalexaminationsandvaccinationsqualifyasETexpenses,providedthattheyarerelatedtotheassignmentoutsidethecountryoforigin.CostsincurredwithinthescopeofapplyingfororlegalisingworkpermitsdonotqualifyasETexpenses.Thesecostscan,therefore,bereimbursedfreeoftax,eventoemployeescomingunderthe30%ruling.2.5.7 CostfortravellingfromhometoworkEmployeesmaybegivenareimbursement(freeoftaxandpremiums)of0.19perkilometer.Anemployerisallowedtopayafixed,taxexempttravelallowancetoemployeeswhotraveltoafixedworkplaceonatleast70%ofthetotalnumberofworkingdaysasiftheytraveltothisworkplaceeveryworkingday.Ifthisisthecase,theformulaoftheDutchTaxandCustomsAdministrationmustbeapplied:214(days)*0.19*km(returndistancehomework).

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Inprinciple,thisisirrespectiveofthemodeoftransport.Thistaxexemptreimbursementmaythereforealsobegivenifemployeestravelbypublictransport.Alternatively,employeesmayreceiveataxexemptreimbursementforthecostsofpublictransportwhichtheyactuallyincurred(however,ticketsmustbehandedoverandkeptwiththepayrolladministration).ShouldanexpatliveinthehomecountryandcommutestotheNetherlands,thesecostsqualifyasregularcommutingcostsandfollowtheregularrulesabove.2.5.8 MealsCostsincurredforregularmealsdonotqualifyascategory1costsnorasETexpenses.Mealsofmorethanamarginalbusinessnaturecanbepaidorreimbursedtaxfree.Thecriterion'ofmorethanamarginalbusinessnature'isthereforedecisive.Mealswithabusinessnatureareforexamplemealsduetoworkinguntileveningoralunchwithclients.Inrespectofforeignassignments,mealallowancescanapplytomealsenjoyedduringashortstayinahotelwhenanemployeeisnotinapositiontoprepareamealhimself.2.6 Category2ETcosts:taxexemptforexpatsImportanttobearinmindasregardstoETexpensesisthatifitisdecidedtoapplythe30%rulingallETexpensespaidseparatelyhavetobedeductedfromthemaximumfixed30%rulingallowance.2.6.1 CostoflivingallowanceCostoflivingallowancesqualifyasETexpensesasfarastheycovertheextracostsoflivingintheNetherlandscomparedtothecostoflivinginthehomecountry.Fortheextraterritorialcostsrentandfurnituredonotqualifyassubsistencecosts,becauseforthesethereareseparaterulesinthedecreeoftheStateSecretaryofFinance.Fortheextraterritorialcostsqualifyassubsistencecostscostyouincurtolive:food,clothing,leisure,smallhouseholdappliances,utilities,etc.Excludedfromsubsistencecostsarerelativelyexpensiveanddurablegoodssuchas:furniture,moped,car,dishwasher,regularwasher,refrigerator,etc.

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ProvidedthattheadditionalcostsresultfromahigherpricelevelintheNetherlandsinrelationtothecountryoforigin.TheadditionalcostsarebasedonthedifferenceincomparativepricelevelsoffinalconsumptionbyconsumersasprovidedbyEurostatbetweenyourcountryandthatoftheNetherlands.Example:iftheNetherlandshasacomparativepricelevelof106.1andyourcountryof88.4,17%ofyoursubsistencecostsqualifyasextraterritorialcosts.NBHealthcostsandhealthinsurancecostsdoNOTqualifyassubsistencecosts(asdeterminedbyDutchIncomeTaxAct).Ifconditionsaremethealthcostscanbedeductedfromthetaxableincomeviatheincometaxreturn.2.6.2 CostofstoringfurnitureThestoragecostsforhouseholdeffectsthatwillnotbemovedtothecountryofemploymentbutremainintemporarystorageinthecountryoforiginqualifyasETexpenses.2.6.3 AdditionalcostoffurnitureTheadditionalcostoffurniturequalifyasETexpenses.TheadditionalcostsarebasedonthedifferenceincomparativepricelevelsoffinalconsumptionbyconsumersasprovidedbyEurostatbetweenyourcountryandthatoftheNetherlands.Example:iftheNetherlandshasacomparativepricelevelof106.1andyourcountryof88.4,17%ofyoursubsistencecostsqualifyasextraterritorialcosts.2.6.4 DoublehousingfornonresidentexpatsDutchaccommodationcostsforanexpat,whocontinuestobearesidentofthehomecountryqualifyandwhocontinuestoownorrentthehouseinthehomecountry,qualifyasETexpensesforthedurationoftheassignment.Doublehousingforresidentexpatsqualifyascategory1expenseforthefirst24(twentyfour)months.Forthosewhohavethe30%rulingthisalsomeansthatthesereimbursementsorbenefitinkindhastobedeductedfromthemaximumfixed30%rulingallowance.

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2.6.5 ExpatsRegularhousingWhenanexpatmovedtotheNetherlandsandtheemployerreimbursestheaccommodationcosts,amaximumof18%oftheemployee'swagesfortaxpurposesisaddedtohisorhertaxablesalary(category3).TheexcessamountqualifiesasanETexpenseallowance(category2).The18%coversonlytherentforthe'stones'.So,(thepartof)therentthatispaidforthefurnitureistaxablesalary(category3).2.6.6 Water,power,gasandotherutilitiesThesecostsforutilitiesqualifyassubsistencecosts,seeabove.2.6.7 Costsforhousehunting/acquaintancetripsCostsincurredforanacquaintancetriptothecountryofemployment,oftenwiththefamily,e.g.togohousehunting,gettingtoknowthecountryorlookforschools,qualifyasETexpenses.However,normallythiswillbedonepriortoactuallystartingtoworkintheNetherlands.Hencetheemployeewillnothavethe30%rulingyet,whichmeansthatthetripcanbepaidorreimbursedtaxfreeasETexpenses.2.6.8 Costsrelatingtohomeleave/familyreunionTravelexpensesrelatingtohomeleaveandfamilyvisits(e.g.anemployeelivingintheNetherlandswhotakeshisorherfamilyonholidaytotheircountryoforigin)qualifyasETexpenses.Thetravelcostsofyourpartnerandchildrenqualifyasextraterritorialcosts.2.6.9 CostsforlanguagecoursesCostsofDutchlanguagecoursesfortheexpatasforfamilymembersresidingintheNetherlandsqualifyasETexpenses.Inourviewitshouldbepossibletoreimbursethecostsoflanguagecoursestoemployeesqualifyingforthe30%rulingfreeoftax,providedthattheycanprovethattheyneedtobeabletospeakthelanguageofthecountryofemploymentinordertobeabletodotheirjob.2.6.10 CoststelephoneRegulartelephonecostsdonotqualifyasETexpenses.Howeveradditional,privatecallsmadebytheexpattofamilyinthecountryoforigindoqualifyasETexpenses.

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NBForallemployees,telephoneandinternetcostscanbereimbursedtaxfreeifitisusedforbusinessforatleast10%.2.6.11 Costsregardingofficialdocuments,medicalexaminations,vaccinationsforprivatepermitsCostsincurredinapplyingfororlegalizingofficialdocuments,e.g.residencepermits,visasanddrivinglicenses,aswellascostsofmedicalexaminationsandvaccinationsqualifyasETexpenses,providedthattheyarerelatedtotheassignmenttotheNetherlands.2.6.12 CostsforinternationalschoolTheactualcostsofattendanceataninternationalprimaryorsecondaryschoolintheNetherlands,orelsewhere,reimbursedorpaidbytheemployerarenottaxableincomeforDutchtaxpurposes,iftheallowanceorreimbursementislimitedtotuitionfeesandtransport.Thisruleisnotapplicabletothecostofboardingschools,thepaymentorreimbursementofwhichwillbeconsideredtaxableincome.2.7 Category3:taxablereimbursementsandallowances2.7.1 Reimbursementexpenseshousepurchase/broker'sfeeReimbursementssuchasthesequalifyassalaryandaretaxableincome.2.7.2 Foreignservicepremium/expatallowance/overseasallowanceTheseallowancesqualifyastaxablesalary.2.7.3 LossesincurredbecauseofthesaleofassetsduetotheassignmentAllowancespaidtocoverfortheselossesqualifyastaxablesalary.2.7.4 CoststaxadvisoryAllowancespaidtocoverthecostsofpersonaltaxservicesandpreparingtaxreturns(inthecountryoforiginaswellastheNetherlands)qualifyassalary.2.7.5 TaxequalizationTaxequalizationallowancesqualifyastaxablesalary.

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3 IncometaxsystemNaturalpersonswhohaveanincomemustpayincometax.Individualsmayreceiveincomefromdifferentsources.Incometaxtakesintoaccounttheoriginoftheincomeanddistinguishesthreecategories.Thesecategoriesareknownasboxes.Theincomeineachofthethreeboxesistaxedatadifferentrate.Thetotalofthetaxowedinthethreeboxesistheincometaxpayable.3.1 TaxpayersIncometaxisataxontheincomeofindividuals.IndividualslivingintheNetherlands(residenttaxpayers)andindividualswhodonotliveintheNetherlandsbutwhoreceiveincomefromtheNetherlands(nonresidenttaxpayers)areliableforincometax.Residentsaretaxedontheirentireincome,regardlessoftheplaceoforigin(worldwide).NonresidentsareonlytaxedonincomedirectlyconnectedwiththeterritoryoftheNetherlands.Thisisdifferentiftheyavailthemselvesoftheoptionofchoosingtobetreatedasaresidenttaxpayer.Thentherulesthatapplytoresidenttaxpayersalsoapply.Incometaxisinprincipleleviedonanindividualbasis.However,fiscalpartnersarepermittedtoallocatejointincomecomponentsbetweenthemfortheirtaxreturn.Fiscalpartnersarespousesandregisteredpartners.Inaddition,unmarriedcoupleslivingtogethermayundercertainconditionsalsobedeemedtobepartnersfortaxpurposes.Jointelementsofincomearethetaxableincomefromanowneroccupieddwelling,taxableincomefromsubstantialinterestandthepersonaltaxdeductions.3.2 TaxbasetaxratesIncometaxisleviedonthetaxableincomeofnaturalpersonsandisreducedbytheamountof(general)levyrebates.Therearethreecategoriesoftaxableincome(box1,2and3)forincometax,eachtypeoftaxableincomehavingitsownrate: Box1taxableincomefromworkandowneroccupieddwelling; Box2taxableincomefromsubstantialinterest; Box3taxableincomefromsavingsandinvestments.Theincometaxpayableistheaggregateamountofthetaxonthetaxableincomeinthethreeboxes.Theincomeofresidenttaxpayersisreducedbytheamountofthepersonaltaxdeductions.

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3.3. Taxdeductions(personal)Thepersonaltaxdeductionsmainlycomprisecoststhataffectthefinancialcapacityofthetaxpayerpersonallyandhisfamilyandthataffecthisabilitytopay.Forexample,thecostsofmaintenancecommitments(childorpartnermaintenance),studyexpensesandexceptionalhealthcostexpenses.Personaltaxdeductionsaredeductedfromtaxableincomederivedfromworkanddwellings(box1).Ifthisisinsufficient,deductionsfromtaxableincomefromsavingsandinvestments(box3)willfollow,followedbydeductionsontaxableincomefromsubstantialinterest(box2).Anyremainingdeductionswillbecarriedforwardtosubsequentyears.3.4 Rates2014Taxontaxableincomeforincomefromworkandowneroccupieddwellings(box1)is: Bracket1:37%taxandsocialsecuritycontributionsonthefirst19.645(5,85%taxand31.15%

socialsecuritycontributions). Bracket2:42%taxandsocialsecuritycontributionsonthenext13.718(10.85%taxand31.15%

contributions). Bracket3:42%taxonthenext22.628 Bracket4:52%taxontheexcess(over55.991)..IndividualsworkingintheNetherlandsgenerallyhavesocialsecuritycoverageandmustthereforepaysocialsecuritycontributions.Anexceptiontothismay,forexample,applyintheeventof(temporary)secondment(A1statement).Taxableincomefromasubstantialinterest(box2)istaxedat25%.Taxableincomefromsavingsandinvestments(box3)istaxedataflatrateof30%takingintoaccountalumpsumyieldof4%.3.5 LevyrebateTaxduefromresidenttaxpayersisreducedbytheamountofthelevyrebate.Thegeneralrebateappliestoallresidenttaxpayers.Thegeneralrebatecomprisesataxelementandasocialsecuritycontributionelement.Entitlementtothecontributionelementofthelevyrebateonlyappliesiftheemployeehas

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compulsoryDutchsocialsecuritycoverage.Inadditiontothislevyrebate,thereareallkindsofsupplementaryrebatesthattakeaccountoftheamountofincomeearnedandthetaxpayerspersonalcircumstances.Therebatesforthosewhoareengagedinwork,forparentswithchildren,forsingleparentsandelderlypeoplewithasmallincome,peoplewhokeeponworkingasoftheageof57,generallycontributetowardsanequitabledistributionofthetaxburden.3.6 Box1incomeworkandowneroccupiedhouseTaxableincomefromworkanddwellingsistheaggregateamountof: Taxableprofitsfrombusinessactivities; Taxablewages; Taxableincomefromotheractivities(incomefromactivitiesthatcannotbequalifiedaswage,

norasprofitsfrombusinessactivitiessuchasfreelanceincomeandincomefrommakingavailableassetstocompaniesinwhichthetaxpayerhasasubstantialinterest,e.g.rentingofpremisestothecompanyorincomefromcarriedinterests);

Taxableperiodicalpaymentsandgrants(e.g.someperiodicpaymentsprovidedforunderpubliclaw);

Taxableincomefromanowneroccupieddwelling; Expenditureforincomeprovision(e.g.thepremiumforretirementannuities); Negativeexpenditureforincomeprovision(e.g.annuitiesthataresurrenderedandthatwere

previouslydeductedfromincome); Thenegativepersonalallowance(e.g.refundforexpensesthathavebeendeductedfromthe

incomeinapreviousyearasapersonaldeduction); Personaldeductions(thisdeductionmaypartlyrunoverintobox3andafterthatpossiblyinto

box2).

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3.7 MortgageinterestdeductibleIntheNetherlandstheinterestpaidonloansusedtofinancetheowneroccupieddwellingcanbedeductedfromthetaxableincomecorrectedwithanamountrelatedtothevalueofthedwelling(seealsoourbrochureaboutit)3.8 Box2substantialinterestAtaxpayerisregardedashavingasubstantialinterestinacompanyifhe,eitheraloneortogetherwithhispartner,holds,directlyorindirectly,atleast5%oftheshares.Incomefromsubstantialinterestistheaggregateamountofthedividendsreceivedandtheproceedsfromdisposal(profitsfromthesaleofshares,profitsharingcertificates,debtsandsuch),afterdeductionofthecosts.Ifataxpayerhasasubstantialinterestinacompany,profitsharingcertificatesorothertypesofsharesissuedbythatcompanyaredeemedtobepartofthesubstantialinterest.Thisisknownasthepullalongarrangement[meesleepregeling].Ifataxpayermakesassetsavailabletoacompanyinwhichhehasasubstantialinterest,theincomegeneratedistaxedinbox1asaresultofotheractivities.Oneexampleofthisistherentingofpremisestothecompany.Fornonresidents,incomefromasubstantialinterestisonlysubjecttotaxifthesubstantialinterestisinacompanyresidentintheNetherlands.Fornonresidenttaxpayers,acompanyisalsodeemedtoberesidentintheNetherlandsifitwasresidentthereforatleastfiveofthelasttenyears.3.9 Box3IncomefromsavingsandinvestmentsThetaxleviedonincomefromsavingsandinvestmentsisbasedontheassumptionthatataxableyieldof4%ismadeonthenetassets,irrespectiveoftheactualyield(suchasinterest,dividend,capitalgainsandlosses).Thenetassets(thefairmarketvalueoftheassetsafterthedeductionofthefairmarketvalueofthedebts)arevaluedattheaverageforthecalendaryearandarethereforenotedononereferencedate:1January.Examplesofassetsanddebtsthatfallinbox3: Savings; Asecondhomeoraletproperty; Sharesandothersecurities; Annuityinsurancesforwhichthepremiumisnondeductible;

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Anendowmentinsurancenotlinkedtothetaxpayersownhome; Consumerloans;Certainassetsdonotneedtobetakenintoaccountincalculatingthevalueoftheassets.Thisapplies,forexample,to: Assetswhichareusedtogenerateproceedswhicharetaxedintheboxes1or2(examplesareassetsdeployedinthebusinessofaselfemployedentrepreneur,owneroccupieddwellingssharesinacompanyinwhichthetaxpayerhasasubstantialinterest,etc.); Articlesforpersonalusesuchashouseholdeffects,apassengercarorcaravan; Worksofartandsciencenotkeptasaninvestment; Certaingreenandsocialethicalinvestmentsuptoamaximumof55,476perpartner.Ataxpayermaynotdeductalldebtsinbox3.Forexample,themortgagedebtforanowneroccupieddwelling(theinterestonthisisdeductibleinbox1)andtaxdebtsarenotdeductible.Thefirst2,900oftheotherdebtsmaynotbedeductedfromtheassets.Forpartnersthisthresholdisdoubled.Theincomeinbox3maynotbenegative,noteveniftheamountofthedebtisgreaterthantheamountoftheassets.Inbox3taxpayersareentitledtoataxfreethresholdof21,139(taxexemptcapital)perpartner.Thetaxpayerandhispartnermayallocateallamountsbetweenthem.3.10 PersonalIncometaxreturnTheincometaxreturnshavetobefiledeachyearwiththeTaxAdministrationbyApril1oftheyearfollowingtherelevanttaxyear.IftheTaxAdministrationdoesnotreceivethereturnontime,itsendsareminderandmayimposeafine.ItispossibletoapplytotheTaxadministrationinwritingforadeferment.EveryonewhofileshisorherreturnbyApril1,receivesnotificationfromtheTaxAdministrationbyJuly1,ofthesameyear.Forcompaniesthismeansthattheannualstatementofemployeewagesmustbeprovidedtotheemployeeslongbefore1AprilsothattheycanfiletheirincometaxreturnswiththeTaxAdministrationinatimelyfashion.Entrepreneurscanonlyfiletheirincometaxreturnselectronically.

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3.11 InternationaltaxresidentsNetherlandsIndividualsresidentintheNetherlandsaresubjecttoincometaxontheirworldwideincome.CompaniesestablishedintheNetherlandsaresubjecttocorporateincometaxontheirworldwideprofits.Thisisknownasresidenttaxliability.Measureshavebeentakentoavoiddoubletaxation,whereresidenttaxpayerspaytaxtwiceonallorpartoftheirworldwideincomeorprofits.Inaddition,naturalpersonswhodonotliveintheNetherlandsaresubjecttoincometaxonincomefromanumberofsourcesintheNetherlands.Thesenonresidentincometaxpayerssubjecttoincometaxmaystillopttobetreatedasresidencetaxpayers.CompaniesresidentoutsidetheNetherlandsaresubjecttocorporateincometaxontheirtaxableprofitsfromcertainsourcesintheNetherlands.Thisisknownasnonresidenttaxliability.3.12 DoubletaxationavoidanceresidenttaxpayersTherearetwowaysinwhichresidenttaxpayerscanavoidbeingtaxedtwiceontheirforeignsourcedincomeandforeignsourceprofits.Inthefirstplace,theNetherlandshasconcludedbilateraltaxtreatieswithalargenumberofcountries.Inthesecondplace,theNetherlandshasunilateralprovisionsthatingeneralapplytosituationswherenotreatyhasbeenconcludedwithaspecificcountryorwhereataxtreatydoesnotincludeaprovisionpertainingtoaspecificcase.Theseunilateralprovisionsarecontainedinthe2001UnilateralDecreeontheAvoidanceofDoubleTaxation.3.13 MethodsAvoidanceDifferentmethodsareusedtoavoiddoubletaxation.Forexample,doubletaxationmaybeavoidedbymeansofthemethodcalledexemptionwithprogressionreservation,viathecreditmethodorbydeductingforeigntaxesascosts.Thefirsttwomethodsareusedinthe2001UnilateralDecreeontheAvoidanceofDoubleTaxationandinthetreatiesfortheavoidanceofdoubletaxation.Thethirdmethod(deductingforeigntaxesascosts)arisesfromanumberofDutchtaxlaws.3.14 ExemptionmethodTheexemptionwithprogressionmethodusuallyappliestoforeignelementsofincomeforincometaxandcorporateincometax.Inprinciple,foreignelementsofincomeareexemptperindividualcountry.TheexemptionmethodmeansthatreductionswillbegrantedforDutchtaxrelatingtoforeignincome.Forincometax,theexemptioniscalculatedperbox.

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Iftheincomeorprofitsfromforeignsourcesexceedthetotalincomeortotalprofits(forexamplebecausethedomesticincomeisnegative),exemptionmaynotormaynotfullybegrantedintheyearinquestionfortheforeignincome.Insuchcases,thetotalamountoftheforeignsourceincomerespectivelytheexcessoftheexemptionmaybecarriedforwardandreductionoftaxmaybegrantedinsubsequentyears.ThisenablestheDutchtaxliabilitytobereducedinthesubsequentyears.ForeignlossesdecreasetheDutchtaxliabilityintheyeartheyaresufferedandwhencalculatingthereductioninsubsequentyearsaredeductedfromthepositiveforeignincomequalifyingforexemption.3.15 CreditmethodThecreditmethodusuallyappliesundertaxtreatiesforforeignwithholdingtaxesonincomefrominvestmentssuchasdividends,interestandroyalties.Inaccordancewiththe2001UnilateralDecreeontheAvoidanceofDoubleTaxation,thecreditmethodonlyappliestoinvestmentdividends,interestandroyaltiesfromdesignateddevelopingcountries.TheDutchtaxisreducedbytheforeigntaxleviedorbytheDutchtaxpayableontheforeigndividends,interestandroyalties,whicheverislower.SincetheforeignwithholdingtaxesforwhichcreditisallowedintheNetherlandsareusuallyleviedonagrossbasis,whilstDutchincometaxisleviedonanetbasis(afterdeductionofcosts),itisquitepossiblethattheDutchtaxwillnotbesufficienttoprovidecreditforthetaxleviedbytheforeignsourcecountry.Fullcreditisthusnotpossible.Inthesecasestheexcessoftheforeigntaxnotcreditedmaybecarriedforwardand,wherepossible,creditedinsubsequentyears.Underthetreatiesaimedatavoidingdoubletaxation,thecreditmethodmaybeappliedtotheincomefromeachseparatecountry.OnthebasisofanapprovaldecisionissuedbytheStateSecretaryofFinance,itisalsopossibletooptundertreatiesforapplicationofthecreditmethodtoallforeignincomefromallcountriestakentogether.3.16 CostsdeductionInsituationsinwhichtherearenoarrangementsforavoidingdoubletaxation,foreigntaxesmaybedeductedascostsrelatedtotherelevantincome.Thisoption(intheincometaxandcorporateincometaxscheme)appliestotheyearinwhichtheincomeisreceivedandtothetotalamountofdividends,royaltiesandinterestreceivedinthatyear.Thetaxpayermayelecttodeductthecostsagainstincometaxinbox1orbox2individually.Costsmaynotbedeductedinbox3.Also,insituationsinwhichacreditwouldnormallybegrantedfordividends,interestandroyalties,thetaxpayermayoptfornonrecognitionofthetaxcredit.Thisisparticularlyadvantageousif,asalreadystated,the(high)foreigntaxinayearcannotbefullycreditedbecausethisishigherthantheamountthatmustbepaidintheNetherlands.

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4 CapitaltaxCapitalgainsaregenerallynottaxable.However,gainsderivedinthecourseofabusinessorgainsonsubstantialshareholdingsaretaxed.4.1 WealthtaxThereisnonetwealthtax.4.2 RealestatetaxRealestatetaxisleviedannuallybythemunicipalitiesfromtheownersofimmovableproperty.Thetaxratediffersforeachmunicipalityanddifferentratesmayapplyforcommercialpropertyandprivateproperty.Forindividuals,realestatetaxisonlydeductibleifthepropertyisusedcommercially.

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5 GiftTaxInheritancetaxInheritanceandgifttaxesareimposedifpropertyisacquiredbyinheritanceorgiftandthedeceasedorthedonorwasaresidentoftheNetherlandsatthetimeofdeathoratthetimeofthegift.NonDutchnationalswhohavebeenresidentintheNetherlandsremainliableforgifttaxintheyearfollowingtheirdeparture.Inheritancetaxisleviedonthebeneficiaryinrespectofhisshareintheestate.However,thetaxauthoritieshavearightofredressagainstallbeneficiarieswithrespecttothetaxdebtofanynonresidentbeneficiary.Gifttaxisleviedonthedonee,butthedonoranddoneeareequallyliableforthepayment.5.1 TaxablebaseThetaxablebaseisthefairmarketvalueofallpropertyreceivedlessliabilities.Allgiftsreceivedbyadoneefromthesamedonorinacalendaryearareaggregated.Giftsreceivedwithin180daysbeforethedeathofthedeceasedaredeemedtobeacquiredbywayofinheritance.Proceedsfromalifeoraccidentinsuranceonthelifeofthedeceasedarealsodeemedtobeacquiredbywayofinheritance,unlessnopremiumswerepaidonaccountofthedeceased.Premiumsactuallypaidmaybededucted.5.2 AllowancesPersonalCertaindeductionsareallowedfromthebeneficiarysshareintheestate.Accordingly,asurvivingspouseorpartnermaydeduct616.880.Asimilardeductionappliestothesurvivingpartnerofanunmarriedcouplewholivedtogetherforatleast5yearsandotherpartnerswithanotariallivingtogethercontract.Childrenmaydeduct19,114.Forsickordisabledchildren,thedeductionis57,342ifthechildrenweremainlymaintainedbythedeceased.Pensionrightsmayreducethedeductionforspousesanpartners.Theirminimumdeductionis155.930.Giftsupto2,01257percalendaryearreceivedfromthesamedonorareexempt.Giftsfromparentstochildren,includingadoptedandstepchildren,areexemptupto5.141percalendaryear.Onceinachildslifetimetheannualexemptionmaybeincreasedto24.676ifthechildsageisbetween18and40.Thisexemptionisincreasedto51.407iftheamountisusedforthepurchase,improvementor

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maintenanceofadwelling,theredemptionofamortgage,longtermleaseofabuilding,ortofinanceeducationcostsofatleast20,000peryear.5.3 ReliefofDoubletaxationIngeneral,foreigntaxesaredeductibleasaliabilityontheinheritanceorgiftreceived.Unilateralreliefintheformofataxcreditisgrantedforforeigntaxonimmovableproperty,assetsbelongingtoapermanentestablishmentandrights(notbeingsecuritiesororiginatingfromanemployment)totheprofitsofanenterprisethemanagementofwhichissituatedinanotherstate.ThecreditislimitedtothetaxactuallyleviedabroadortheNetherlandstaxattributabletotheassetssituatedabroad,whicheverislower.

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6 Othertaxes6.1 VATValueaddedtax(VAT),knownasbtwintheNetherlands,isageneralconsumptiontaxleviedonallprivatespendingandisincludedinthepriceconsumerspayforgoodsandservices.Allcompanies,e.g.baker,plumber,manufacturer,subsequentlyremitthetaxtothetaxadministration.EntrepreneursmaydeductfromthisVATtheVATchargedtothembyotherentrepreneurs.Ineffect,theyonlyremitthedifferencetothetaxadministration.Ifthisdifferenceisnegative,thetaxadministrationrefundsthisamounttotheentrepreneursinquestion.Anumberoftransactionsaretaxexempt.InthiscasethecompanydoesnotchargeVATandtheVATchargedtothecompanyisnotdeductiblewherethegoodsandservicesboughtareusedforexemptactivities.Exemptactivitiesincludevariousmedicalservices,certaintypesofeducation,insurancesandbankingservices.Thegeneralrateis21%.Inaddition,therearetwospecialrates.6.2 VAT6%Thisrateappliestofoodandmedicines,anumberofmedicalaids,somelabourintensiveservices,booksandmagazines,passengertransport,anumberofentertainmentservicessuchasentrancefeesforsportingcompetitions,zoos,circusesandtheatre,forwaterandforanumberofgoodsandservicesforuseinagriculturalproduction.6.3 VATzerorate0%Thisrateapplies,subjecttoconditions,tocrossbordertransactions,i.e.totheexportofgoodstoacountryoutsidetheEuropeanUnion(EU),tothesupplyofgoodstocompanieswithintheEUandfortheservicesrelatedtothesesupplies.TheresultisthatthegoodsleavetheNetherlandsfreeofVAT.6.4 ExcisedutiesconsumptiontaxesExcisedutyisaconsumptiontaxleviedoncertainconsumergoods,e.g.alcoholicbeverageslikewine,port,sherryandbeer,andproductsliketobacco,petrolandothermineraloils,e.g.diesel,domesticfueloilandLPG.LikeVAT,excisedutyisincludedinthepricetheconsumerpays.ThetaxisremittedtotheTaxAdministrationbythemanufacturersintheNetherlands,bytradersandalsobytheimportersofexcisable

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goods(forexample,importersofAmericanbrandy).Aspecialconsumptiontaxisleviedonnonalcoholicbeveragessuchasfruitjuices,vegetablejuices,mineralwaterandcarbonatedsoftdrinks,includingcordials.6.5 CrossborderofgoodsSince1993,privatecitizenshavebeenabletobuywine,cigarettesandotherdutiablegoodsinanyMemberStateandtakethemtoanyotherMemberStatefortheirownpersonaluse.Theypayexcisedutyinthecountryofpurchase.Ifprivatecitizensdonottakethegoodswiththemforpersonaluse,but,forexample,theyareinsteadtransportedorsoldbyothers,excisedutyisleviedinthecountrywherethegoodsareconsumed.Inthecaseofmailordersalesordistanceselling,excisedutyisleviedinthecountryofdestination.TheharmonizedexcisedutysystemoftheEUinvolvesforexamplealsogeneralconditionsforstorage,movementandmonitoringofexcisegoodsintheMemberStatesandregulationsconcerningexcisedutyratesandexemptions.6.6 2%transfertaxTransfertaxisleviedontheacquisitionofboththelegalandthebeneficialownershipofrealestatesituatedintheNetherlands(land,housesandthelike).Inmostcases,adeedisdrawnuponthetransferoftherealestatebyacivillawnotary,whoinvoicesthetaxpayableandremitsittothetaxadministration.Transfertaxischargedatarateof2%onthemarketvalueoftherealestate,orontheconsiderationifthatishigher.Considerationistakentomeanthecompensationreceivedorwhateverhasbeenstipulatedbythepartytransferringtherealestate.6.7 PassengercarsandmotorcyclesTaxonpassengercarsandmotorcyclesispaidonceatthetimeofregistrationorfirstuseoftheroadintheNetherlands.Ifitthepassengercarisnew,theimporterpaysthetaxonbehalfofthebuyer.Apersonimportingausedpassengercarormotorcyclemustpaythetaxhimself.

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Exemptionsapplytospecificgroupsofvehiclessuchastaxis,deliveryvansofentrepreneursandfireengines/policevehicles.Itisalsopossibletoobtaintaxexemptionforpassengercarswithaforeignregistrationsubjecttocertainconditions.6.8 UsedcarsandmotorcyclesForusedpassengercarsandmotorcyclesthetaxisreducedinlinewiththedecreaseinvalueofthevehicle.Therearefixedpercentagesforthis.6.9 TaxonmotorsPeoplewhohaveapassengercar,van,motorcycleorlorryregisteredintheirnamearesubjecttomotorvehicletaxinrespectofthatvehicle.Thetaxliabilityisthereforelinkedtoregistrationandnottouseoftheroad.6.10 EnvironmentaltaxesEnvironmentaltaxescovertaxesongroundwater,tapwater,waste,fuelandtheenergytax.6.11 TaxongroundwaterThegroundwatertaxispayablebycompaniesthatextractgroundwatersuchaswaterworks,farms,drainagecontractorsandmanufacturingcompaniesthatusegroundwater,e.g.ascoolingwaterorprocessingwater.Exemptionsincludecaseswhereonlysmallamountsofgroundwaterareextracted,foremergencypurposes,forwateringandirrigationintheagriculturalsector.6.12 TaxontapwaterIntheNetherlandstaxisleviedontapwater.Acompanyorapersonwhoobtainswaterviaawatersupplysystem,whetherornotthewaterisofconsumablequality,paystaxonanamountuptoamaximumof300cubicmetersperyear,perconnection.Thetaxiscollectedbythewatercompany,whichpassesthetaxtothetaxauthorities.Thereisanexemptionforwatersuppliedforemergencysituations,forexamplefireextinguishingwater.

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6.13 WasteTaxThistaxisleviedonwastethatislandfilled.Thewasteprocessingcentersareliabletopaythetax.Theyareobligedtopaytaxaccordingtotheamountofwastetheyareofferedforlandfilling.6.14 FuelsTaxFueltaxismainlypayablebyproducersandimportersofcoal.Thetaxispayablebypersonswhoextract,produceorimportcoalandsubsequentlyuseitasfuelorsupplythemtoothers.Nofueltaxispayableoncoalusedtogenerateelectricity.Useotherthanasfuelisexempt.6.15 EnergyTaxEnergytaxisataxleviedontheconsumptionofenergy(naturalgas,othergases,electricityandcertainmineraloils).Naturalgas,othergasesandelectricityusedforgeneratingelectricityareexemptfromtheenergytax.Theratesarelinkedtotheamountofenergyconsumed,andtherearereducedratesforhigherconsumption.6.16 Importduty/customsdutiesWhencompaniesimportgoodsfromcountriesthatarenotmembersoftheEuropeanUnion(EU),taxisleviedonmanyofthesegoods.InthiscontextthetermimportdutyisagenericnameforthetaxesimposedinconnectionwiththeEU.ThesetaxesarecollectedbythecustomsservicesoftheMemberStatesandremittedtotheEU.TheyconstitutetheUnionsownfinancialresources.Ascompensation,theNetherlandsispermittedtoretain25%ofthesetaxes.Importdutiesareunderstoodtobe:Customsduties(whicharedutiesfromtheCustomsTariffoftheEU);Levieswithasimilareffect(includingantidumpinglevies);Taxesinconnectionwiththecommonagriculturalpolicy.TheEUfixesthelevelofimportduties.ThegoodstobeimportedareclassifiedinthecombinedNomenclature,whichisalistofgoodsandtariffs.TheEUhasconcludedagreementswithanumberofcountriesunderwhichnoimportdutyislevied,oritisleviedatalowerrate.

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IfbusinessesintheEUcandemonstratethattheirbranchissufferingdamagebecauseproductssimilartotheonestheyproducearebeingimportedatpricesbelowthosechargedinthecountrywherethegoodsareproduced,thispracticewillbedeemedtobedumping.Ifsuchcasesarise,theEUmaylevyanantidumpingduty.Inadditiontotheaforementionedimportduties,valueaddedtaxisleviedontheimportofgoodsintotheNetherlandsfromthirdcountries.Whereappropriate,excisedutyandenvironmentaltaxesarealsolevied.

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7 SocialsecurityWithrespecttosocialsecuritythefollowingcontributionsareincludedinthewagetaxandarecollectedviathepayrolloftheemployer:

GeneralOldAgePensionAct(AlgemeneOuderdomsWet,AOW).Underthisacteveryresidentisentitledtoabasicoldagepensionuponreachingtheageof65.

GeneralWidows'andOrphans'BenefitsAct(Algemenenabestandenwet,ANW).Underthisprovisionwidowsandorphansareentitledtoanindexlinkedpension.

Othergeneralbenefits.Anumberofotherbenefitsareavailable,includingfamilyallowances,coverforexceptionalmedicalexpensesandnationalassistancebenefitwhichisavailabletothoseinneedbutnotcoveredbytheotherschemes.

7.1 EmployeessocialsecurityschemesThepremiumsfortheemployeesocialsecurityschemes(werknemersverzekeringen)arecollectedseparatelyfromwagetaxandarecollectedviathepayrolloftheemployer.7.1.1 Unemploymentbenefit('Werkloosheidswet,WW")Incaseofinvoluntaryunemploymentallemployeesareentitledtoclaimabenefittotalling70%oftheirbasicwage(uptoagivenmaximum).7.1.2 Sicknessbenefit("Ziektewet,ZW"):Sicknessbenefitof70%ofthebasicwage(uptoagivenmaximum)ispayabletoemployeeswhoareunabletoworkasaresultofsickness.Inmanycases,theemployerwillcontinue,voluntarily,topaytheemployeehisfullwage,inwhichcasehewillreceivearefundequaltothebenefitwhichwouldhavebeenpayable.After104weeksinvaliditybenefitbecomespayable.Theamountofbenefitthenpayabledependsonthedegreeofinvalidity.7.1.3 Disabilitybenefit("Wetwerkeninkomennaararbeidsvermogen;WIA)Ifanemployeehasbeeninreceiptofsicknessbenefitfor104weeksandisstillunabletowork,heisundercertainconditionsentitledtoWIApaymentsofupto70%ofhisbasicsalarydependingonthe

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extentoftheinvalidity.Thesepaymentscontinueuntiltheageof65unlesstherecipientrecoversfromhisinvalidity.7.2 HealthInsuranceAct("ZorgVerzekeringsWet,ZVW")TheZVWstandsforZorgVerzekeringsWet,whichistranslatestoHealthInsuranceAct.Thisactcovers/paysfor(mostof)thehealthcarecostslikethegeneralpractitioner,hospitals,etc..AllresidentsoftheNetherlandsareobligedtohaveahealthinsurance.Itisaprivatehealthinsurancewithsocialconditions.Privatehealthinsurancecompaniesoperatethesystem;theinsurersareobligedtoaccepteveryresident.Theinsuredpersonpaysanominalpremiumtothehealthinsurerofaboutapproximately1,200peradultperyearandthe"bijdrageZVW",whicheffectivelyispaidbytheemployerandisshown/statedonthepayslipeachmonth(ofcourseforthosewhodonothaveanA1).Individualsandcouples(livingtogetherormarried)whosincomerespectivelycombinedincomeisbelowacertainthresholdgetpartofthecontribution("bijdrageZVW"paidthroughthepayroll/payslip)refundedfromthetaxauthorities.Thisrefundiscalled"Zorgtoeslag".Healthinsurance:getitwithin4monthsofarrival!.Sincethisisratherunknowntosomeexpatswewarnyouaboutourhealthinsurancesystem.EveryonelivingorworkingintheNetherlandshastohaveahealthcareinsurancewithin4monthsafterstartingtoliveand/orworkintheNetherlands.Ifyouapplyafter4monthsafineisdueof130%ofthepremiumsthatwouldhavebeenpayabletotheinsurer.Youcanobtainthebasicinsurancepackagefromanyinsurerandtheinsurercannotrefusetoinsureyou.Ifyouwant,supplementaryinsuranceisavailable.However,theinsurercanrefuseyousupplementaryinsurance.

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8 PensionsTheDutchpensionsystemconsistsofthreepillars.ThefirstcomprisesthebasicstateguaranteedretirementpensionplanforeveryoneintheNetherlands.TheGeneralOldAgePensionActprovidesforcompulsoryinsuranceplanyieldingaretirementpensionforeveryoneaged65andover.UptoretirementeveryonewithataxableincomehastopayAOWcontributions.Everyoneaged1565isinsured,regardlessofnationality.TheAOWpensionispaidasafixedamountpermonth.Theamountislinkedtothestatutorynetminimumwage,whichisdeterminedbylawandappliestoeveryoneworkingintheNetherlands.Currentlytheretirementageis65,whichmeansthatforeachyearasof15yearsoldthatyouarearesidentoftheNetherlandsyouareentitledto2%AOWpension.SoifyoulivedintheNetherlandsfor50yearsattheretirementageyouareentitledto100%AOWpension.Ifyouhavelivedherefor10yearsyouareentitledto20%AOWpension.Thesecondpillarcomprisesworkrelatedsupplementarypensions,whicharetheprimaryresponsibilityofthesocialpartners.Supplementarypensionplansarepartofthetermsofemploymentagreedinnegotiationsbetweensocialpartners.Employersarenotlegallyobligedtoprovidepensionplansfortheiremployees,butiftheydoso,thepensionplanshavetomeetcertainstatutoryrequirements.TaxlegislationintheNetherlandsmakescontributionstosupplementarypensionplanstaxdeductible,whereasthepensionpaymentsaretaxed.ThethirdpillaroftheDutchpensionsystemcomprisesindividualpensionplans(inDutch"lijfrenten").Theseshouldbetakenoutbyaninsuranceproviderandhavenothingtodowiththerelationshipbetweenemployeesandemployers.Incaseyouwouldliketohavemoreinfo,pleasecontactinfo@mffa.nl,orcall+31643757868