Three things are certain in life: death, taxes and.... what was the third thing? In all seriousness, however, as even students have to pay taxes. Granted, not everyone will apply to the situations we are going to discuss, but some of you will. In the Netherlands, there are few types of taxes that apply to everyone. In the case that you are going to be working alongside your studies, you will have to pay income tax. Some will have to pay taxes for water and trash, or for your car, in some cases. Here we have outlined the most relevant taxes to international students.
If you are working, chances are you must pay income tax. This is probably the most relevant tax for students living and working in the Netherlands. In Dutch, this is called inkomstenbelasting. When you live and study here, you are considered a resident. This is especially the case if you have registered at your local municipality and received your BSN number.
When you receive your monthly income, a certain percentage of it is deducted by the Dutch Tax Office. The amount of tax you pay largely depends on how much income you have. Your income is categorized into three groups:
- Your income from work
- Financial interests in a company
- And your savings and investments
As a working student, you are most likely only getting your income from your work, not investing in companies. So, your income from work includes the following:
- Your salary or any sort of profits (like tips)
- Benefits and pensions
- Income from abroad
- Income earned from freelancing (if you have a freelancing contract, for instance)
You can use this handy income tax calculator to figure out what kind of numbers you are dealing with. At the end of the year, you need to declare your income. You will receive a final tax notice.
There's also something called payroll tax deduction. Essentially, you are can qualify to get a discount on your tax. To do this, you need to ask your employer to fill out a specific form. In the end, it sort of works like this: you receive more pay and they pay less tax. You can read all about payroll tax deduction here.
In our Key Resources we have listed some points of contact for you if you want help or advice when it comes to paying taxes.
If you are working, then VAT tax may also apply to you. VAT, or Value Added Tax, is the tax added to goods and services in the European Union. In short, it's a sum that is added to the sale price of the thing being sold. In the Netherlands, it's also called a turnover tax. Usually, you charge VAT for things like delivery costs, packaging costs and so on. Here's more information on charging for VAT.
VAT tax may apply to you if you are an entrepreneur who is not based in the Netherlands. So, if you sell products or provide a service to the Netherlands, you are considered a foreign entrepreneur when it comes to VAT tax. You therefore do not have a permanent establishment in the Netherlands. A non-permanent establishment could be a storage space, for instance. You can read more about the details on this webpage.
If you are based in the Netherlands, you are considered an established entrepreneur. For example, this could be a store or office where you do your business. In this case, you must follow the same VAT tax rules as Dutch entrepreneurs. When you have registered your company and gotten your entrepreneurship permit, the Chamber of Commerce will inform you if you need to pay this VAT tax. How do they decide this? This is the criteria they use to figure out if you must pay VAT tax (this page is only in Dutch, so make sure to translate it!). Here's a full page of information specifically for Dutch VAT tax regulations.
Depending on where you live, you might have to pay municipal taxes. These include property tax, water and trash tax, and more. As a student, you are probably not a home owner. Most likely, you rent. Consequentially, real estate tax does not apply to you.
When it comes to water tax, whether you must pay for it or not depends in what area you or property you are living in. When you sign a rental agreement, you will be told if you need to pay water tax.
Usually, you have to pay two types of water tax. One is the water board tax which goes towards regional water management. This includes controlling water levels, for example. Then, there is the pollution levy if your house is not connected to a sewage system. There is also a water purification tax which insures that water is kept clean. Just keep in mind that when you rent a place, you also must pay for your own drinking water usage. If you are paying exclusive utilities, meaning you pay for utilities separate from your monthly rent, you must pay for your own usage as well as taxes. Are you paying inclusive utilities? Then you are paying for your energy and water in combination with your rent in one payment. If that is the case, you won't be taxed for water.
This is also called the waste collection levy, and is used for collecting household trash and then disposing of it. How much tax you pay depends on how many people are living in your apartment or house with you.
Road and Parking Tax
If you own a car or a motorcycle, you also have to pay road tax. How much you pay depends on the size of your car or motorcycle. When you import a car, for example, from another country or you buy one in the Netherlands, you have to pay tax. It also has to be registered in your name or if you use foreign number plates on your motorcycle. You can go to this site to calculate how much tax you might need to pay.
Moreover, depending on what city or area you live in, you might have to pay a parking tax. For example, if you use a car or motorcycle in Amsterdam you must pay parking tax. You have two options to do this. One is using on-street parking fees, so buying a ticket. The other is getting yourself a parking permit.
'Tourist Tax' or Sub-Letting Tax
This is a unique situation. If you want to sub-let your place to tourists or other people who are not permanent residents, you have to pay tourist tax. This also depends on where you live, so make sure to check your municipality website. So, if you are looking to make some extra money off of Airbnb, for instance, this applies to you. Or, if you want to sub-let your place to another student while you go off on exchange, this is also the case. This is done without an official agreement. If you want to do this, privately or through some sort of housing website, you have to register this information and your guests must pay you the ‘tourist tax’. If you head on over to your municipality website, you can search for the relevant forms to fill out.