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I'm considering a job in the Netherlands. The annual gross income is 70,000. Checking online it says it falls on a tax bracket of 51.75%. I deducted that to the gross then divided by 12 months, I get around 2,800. But when I check online tax calculators, it says I should get round 3,700 net. Can anybody please tell me what's going on? Cheers!

  • The main thing you need to know is whether you qualify for the 30% expat deduction. This is a huge deal - for you it would mean you can take a non-itemized €21000 deduction, which would increase your monthly net income by about €800. It's limited to the first 5 years, though. – MSalters Jul 30 at 12:55
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Like in the USA, the UK, and many other countries, you don't pay that percentage on all your money, but only for the money that falls into that tax bracket. Most of your income will fall into lower tax brackets (and I expect that the first few thousand euros a year will be totally tax free, but you'd have to find a table for that yourself).

  • The last assumption is incorrect; the first euro will be taxed at 36,55%. Unlike the USA and the UK, the Netherlands does not have a "pure" bracket system. Instead, deductions and brackets interact in a way that's not understandable by mere mortals. The question however happens to mention a gross income of 70.000. This simplifies a few calculations; it's high enough that certain deductions no longer apply. – MSalters Jul 30 at 12:42
  • @MSalters That's not true, it's only that the punlished tax rates don't reflect that in a straightforward way and the exact amount that's tax-free depends on your personal situation. That's what the algemene heffingskorting is about. I guess that's what your second sentence alluded to but the fact remains that the first euro is never taxed. – Relaxed Jul 31 at 21:53
  • @Relaxed: That's indeed one of the complicated deductions, if you can take it. But despite its name ("general deduction"), it's no longer a general deduction. It's only for people earning less than 68.507, which means it does not apply to the situation in the question. The first of those 70.000 euro's will be taxed at 36.55% – MSalters Aug 1 at 7:02
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Marginal tax rates mean that you pay different amounts of tax on different levels of income. In the US you pay 10% on the first $9975, and even that is after the standard deduction of $12k. So you pay no tax on the first $12k on income, then 10% on the next $9975 and so on. It doesn't matter how much money you make, you get $12k free and you only pay 10% on the next $9975.

Do consider social security insurances, though. You'll likely end up paying around 20% in health insurance, retirement insurance, unemployment insurance and so on. I don't know the exact figures for the netherlands, but I would be surprised if it's vastly different from 20% total.

  • Social security is 27,65% but only over the first €34K. Health insurance is on average €1432 (private contribution, assuming no deductible, paid from net income). Retirement should be checked as it varies between employers. So yes, it's vastly different from the US. – MSalters Jul 30 at 12:50
  • In fact, most payments to the social insurance system in the Netherlands are baked in the rates published by the tax office so that's a wash. – Relaxed Jul 31 at 21:55
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Dutch Income tax has different brackets and also has deductions.

We have in Box 1 the employment income, pension income, profit income, any and all income generated by work, former work, company or activities that have exceeded the hobby status. Also in Box 1 you have the deductions. Deductions such as the mortgage deduction, study costs, illness, alimony (both costs and income are reported here), and the other deductions we have. The tax rate is the progressive tax rate that ends at 52%. This is the most common box to have your taxable income in. Source

Dutch tax rates The Dutch government is set to reduce the number of income tax brackets down to two in 2021. In 2019, however, three bands will operate as follows:

Up to €20,384: 36.65% €20,384–€68,507: 38.1% €68,507+: 51.75% From 2021: Up to €68,507: 38.1% €68,507+: 51.75%

In addition, Dutch social security tax is paid at a rate of 27.65% in 2018 (or 9.75% for pension-age residents). To get an idea about your individual income tax in the Netherlands, you can use a Dutch income tax calculator.Source

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