The Dutch turnover tax is known as BTW (belasting over de toegevoegde waarde), which is the Value Added Tax (VAT) applied to most goods and services, generally at rates of 21% or 9%. It is a consumption tax added to prices, with businesses collecting it for the tax authority, while being able to deduct VAT paid on business expenses.
Turnover tax (BTW)
VAT rates in the Netherlands are 9% or 21%. Some products and services are exempt from VAT (0%). You can usually reclaim the VAT that your business pays on the goods and services it purchases. Turnover tax returns can be filed either monthly, quarterly, or annually. Read how to file your VAT return.
This tax is typically calculated as a percentage of the total transaction value when securities, such as stocks and bonds, are bought or sold. The purpose of this tax is to generate revenue for the government and regulate trading activities in the financial markets.
The Dutch 30% ruling (now often called the expat scheme) is a tax benefit for highly skilled foreign employees in the Netherlands, allowing 30% of their gross salary to be paid tax-free for a limited period, intended to compensate for extra costs of moving. Recent changes (effective 2024-2027) have phased out the 30-20-10% reduction, introducing a flat 27% rate from 2027 and increasing minimum salary thresholds (e.g., €48,013 for 2026), with lower thresholds for under-30s with a Master's degree. Eligibility requires recruitment from abroad, specific skills, and meeting salary norms, with the employer applying for it.
The government levies taxes on all goods and services that are provided. This is referred to as turnover tax (also known as VAT or, in Dutch, BTW). At the moment, the highest rate is 21% and the lowest 9%.
Sometimes a client pays an invoice only partially or not at all. In that case, the entrepreneur has paid too much turnover tax, because the tax was calculated on an amount that was never fully received. The law allows these excess payments to be reclaimed.
You can choose to register for VAT if your turnover is less than £90,000 ('voluntary registration'). You must pay HM Revenue and Customs ( HMRC ) any VAT you owe from the date they register you. You do not have to register if you only sell VAT exempt or 'out of scope' goods and services.
The average income in the Netherlands is around €36,500 gross per year. This means that a salary of €70,000 is almost double the average income. It is therefore understandable that this is considered a high income.
U.S. citizens employed in the Netherlands who have been taxed under the 30% ruling, the abolition as of 1 January 2025 of partial non-resident taxpayer status brought significant changes. These employees, like others taxed under the 30% ruling, can no longer choose to be considered partial non-resident taxpayers.
As of Spring 2023, the most important issue facing people in the Netherlands was that of the environment and climate change, with over a majority of respondents selecting this option as being in one of the two most important issues. By comparison, relatively few people named the government debt or unemployment.
One of the disadvantages of turnover tax is that a business operating at a loss will still have to pay turnover tax (Visser, 2009). Under the income tax system, no tax is payable when businesses are operating at a loss. The assessed loss can then also be utilised against the first profits of the business.
Turnover tax is reserved for micro businesses with a “qualifying turnover” of less than R 1 million for the financial year. “Qualifying turnover” is the total amount received by a business for the year of assessment from carrying on business activities.
To calculate turnover (employee churn), you divide the number of employees who left during a period by the average number of employees in that same period, then multiply by 100 for a percentage, using the formula: (Leavers / Average Employees) x 100, where average employees are (Start Count + End Count) / 2.
There isn't one single "highest tax paying country" as it depends on what's measured (income, corporate, total tax revenue), but countries like Denmark, Finland, Japan, and Ivory Coast (Côte d'Ivoire) consistently rank highest for top personal income tax rates, often exceeding 50-60%, while nations like Belgium can have the highest overall tax burden on labor (tax wedge) for average earners, with high social security. Nordic countries and some European nations generally have high income taxes, funding extensive social services.
In the Netherlands, this amount is generally considered above average. The average net salary in the Netherlands is around 2500 euros per month, so with 3000 euros, you are above that. This means that with this salary, you should be able to live comfortably, provided you manage your expenses well.
Corporate Income Tax is calculated on your net income, which means you subtract your expenses first. Turnover Tax is based on your total sales, without subtracting any expenses.
There's no special retirement visa for the Netherlands. Entering the country for lengthy stays is easy because US citizens automatically qualify for a provisional residence permit (MVV) that allows stays past 90 days.
Based on the US-NL Income Tax Treaty, the US has the “first” right to tax US Social Security, which means that the Netherlands needs to allow for avoidance of double taxation. This is done by including the US Social Security in the section “Aftrek om dubbele belasting te voorkomen”.
The Dutch 30 percent ruling is a tax facility that allows employers to compensate international employees for the extra costs of living abroad. Instead of these "extraterritorial costs" being taxed as regular income, up to 30% of an employee's gross salary can be paid as a tax-free allowance.
A high income in the Netherlands is often seen as a salary of €70,000 gross per year or more. This can vary depending on the sector, level of education, and work experience. By investing in your education, skills, and network, you can increase your chances of earning a substantial salary.
At the other end of the scale, 448 thousand people (5.5 percent) earned at least 100 thousand euros, and 1.6 thousand had an income of more than 1 million euros a year. As these high incomes pull up the average Dutch income from work, CBS also calculates the median income.
A single person in a city like Amsterdam might need a gross annual income of €50,000-€60,000 for a comfortable life, including rent. Outside major hubs, €40,000 could be sufficient. Additionally, the median gross annual salary provides a solid benchmark for a middle-class income.
What happens if you go over the VAT threshold? If your business has exceeded the VAT threshold in the last 12 months, or you expect it to in the next 30 days, then you are legally required to register for VAT. Even if you go over the threshold temporarily, you are still expected to register.
Put simply, turnover is the total amount of money your business receives from the sale of goods and services – minus discounts and VAT. Turnover is calculated over a specific period of time, usually a quarter or financial year.
VAT stands for 'Value Added Tax'. It is classed as a 'consumption tax' and placed on almost all sales of goods and services. This amount is then passed to HMRC as part of the business' VAT returns.