Tax rate and tax brackets in the Netherlands - how is tax calculated?
Article ID: 181 | Last Updated: Mon, Dec 9, 2013 at 12:55 PM
I am considering applying for a job in the Netherlands. I have found the tax amounts for 2012 but it does not indicate that if you earn above 56,491 euros this is 52% on the whole amonut or part of a sliding scale as in the lower bands. In other words 22,033 euros for the year up to this amount and then 52% over this amount. Please could you clarify?
The tax rates in the Netherlands are indeed progressive. The higher the salary, the higher the tax rate will be. By using tax brackets the tax rates are applicable in steps. Each bracket has its own rate. So if you are in the 52% tax bracket this doesn't mean that you pay 52% on your entire income, just over the part which falls in the 52% bracket. The average tax rate will therefore be lower than 52%. Tax deductions may transfer your income into a lower bracket, tax credits will reduce the calculated tax even further.
In the table on the linked page you will find a column with tax per bracket and a column with cumulative tax.