Netherlands

The Netherlands uses a progressive income tax system (Box 1) with two brackets in 2025: 36.97% on income up to EUR 76,817 and 49.50% on income above that threshold. This simplification from the previous four-bracket system took effect in recent years. Social insurance contributions are integrated into the first bracket. The Dutch tax system is organized into three boxes: Box 1 (employment and home ownership), Box 2 (substantial shareholdings, taxed at 33%), and Box 3 (savings and investments, taxed on deemed return at 36%). The 30% ruling allows qualifying foreign workers to receive 30% of their gross salary tax-free for up to five years, making the Netherlands highly attractive for international talent. Employee social insurance contributions include health insurance premiums (approximately EUR 1,800 per year for basic coverage, mandatory for all residents), plus income-dependent contributions. Employer contributions cover unemployment insurance, disability insurance, and the Healthcare Insurance Act contribution. The Netherlands mandates pension participation through industry-wide or company pension funds. Employer and employee contributions typically total 15-25% of pensionable salary. The pension system is transitioning from defined benefit to defined contribution under the Future of Pensions Act. VAT is 21%, with a reduced rate of 9% on food, books, and medicine. The corporate tax rate is 25.8% (19% on the first EUR 200,000). The Netherlands has an extensive tax treaty network and is often used as a holding company jurisdiction.