Relocating international talent to the Netherlands comes with many opportunities—but also tax responsibilities that can seem overwhelming at first. The Dutch tax system is structured around a unique “box” system, categorizing different types of income. Understanding these tax categories is crucial for compliance and financial planning.
At EMG, we empower HR professionals with expert guidance on global mobility, ensuring seamless compliance and efficient tax management for their international workforce. In this guide, we break down the Dutch tax system into clear, actionable insights—so you can navigate tax obligations confidently and focus on what really matters: attracting and retaining top talent.
Dutch Income Tax Explained: Box System Breakdown
The Dutch tax system organizes income into three distinct “boxes,” each with its own tax rates and regulations. Filing correctly ensures compliance and maximizes available benefits.
Here’s what you need to know:
Box 1: Income from Employment, Profits, and Homeownership
Box 1 includes earnings from employment, freelance work, business profits, pensions, and foreign income.
✅ 2025 Tax Rates:
- Up to €38,441 – 35.82%
- €38,441 to €76,817 – 37.48%
- Over €76,817 – 49.50%
Key Deductions: Mortgage interest relief, medical expenses, tuition fees, and specific maintenance costs can reduce taxable income.
Box 2: Income from Substantial Interests
If an individual owns at least 5% of shares in a private limited company (BV), their income from dividends and capital gains falls under Box 2.
✅ 2025 Tax Rates:
- Over €67,804 – 31%
- Up to €67,804 – 24.5%
Box 3: Income from Savings and Investments
This box covers income from savings, investments, and rental properties. The Dutch tax system applies a deemed return (hypothetical income) based on asset value rather than actual gains.
✅ 2025 Tax Rate: 30% on deemed returns, with exemptions available for certain asset thresholds.
Tax Considerations for International Employees
Residency Status & Tax Implications
- Residents: Taxed on worldwide income across all three boxes.
- Non-residents: Taxed only on Dutch-source income.
Major Change for 2025: Expats using the 30% ruling can no longer claim partial foreign taxpayer status. This means income in Box 2 and Box 3 is now taxable in the Netherlands.
The 30% Ruling: 2025 Updates
For highly skilled expats, the Netherlands offers a tax break through the 30% ruling. However, recent changes impact eligibility and benefits:
✅ New Cap: As of January 1, 2024, the tax-free allowance is capped at 30% of the Balkenende norm—a salary threshold set annually based on top public sector salaries in the Netherlands, currently €73,800 for 2025. salary threshold set at €73,800 for 2025.
✅ Partial Foreign Taxpayer Status Abolished: From January 1, 2025, expats with the 30% ruling are fully taxable on worldwide income.
✅ Gradual Reduction: Starting January 1, 2027, the tax-free allowance percentage will drop from 30% to 27%.
How EMG Supports Your Global Mobility Strategy
Navigating the Dutch tax system doesn’t have to be complicated. At EMG, we provide expert tax and compliance support tailored for HR professionals managing international talent.
🔹 Compliance Made Easy: We provide expert HR tax compliance solutions and global payroll management to ensure seamless tax processes for your international workforce.
🔹 Strategic Tax Planning: Maximize benefits like the 30% ruling while ensuring accuracy.
🔹 Tailored Support: We guide you through residency tax implications, deductions, and regulatory updates.
Book a call with our experts today to ensure your international hires experience a smooth, compliant transition to the Netherlands.
