Turnover tax in the Netherlands, known as BTW (omzetbelasting or VAT), is a value-added tax added to most goods and services. The standard rate is 21%, with a reduced 9% rate for essentials like food, water, and, in some cases, services. Returns are typically filed quarterly, though monthly or annual filing is possible. Business.gov.nl +4
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.
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%.
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 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.
The Netherlands is a Schengen area country. Canadian citizens do not need a visa for travel to countries within the Schengen area. However, visa-free travel only applies to stays of up to 90 days in any 180-day period.
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.
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.
Almost all countries levy a general turnover tax, i.e. a tax on essentially all goods and services supplied by manufacturers, traders and service providers. Those turnover taxes are mostly levied under a VAT type of tax system and, in a decreasing number of cases, as a multi or single-stage (retail) sales tax.
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.
Calculating VAT in the Netherlands
There are three VAT rates: 0%, 9% and the standard VAT rate of 21%. The VAT rate you charge depends on the goods and services you offer: For certain services the rate is 9%.
A turnover tax is similar to VAT, with the difference that it taxes intermediate and possibly capital goods. It is an indirect tax, typically on an ad valorem basis, applicable to a production process or stage. For example, when manufacturing activity is completed, a tax may be charged on some companies.
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.
Delivery: Turnover is calculated based on the sell-side value of the stock. Intraday: Turnover is calculated based on the absolute sum of the profits and losses per stock. F&O (equity, currency, commodity): Turnover is calculated based on the absolute sum of the profits and losses per F&O contract.
A turnover tax is a gross receipts tax that is applied every time a good or service “turns over,” that is, every time the good or service transfers from one entity to another for consideration. The tax base is therefore turnover, and the measure of the tax is gross receipts.
To work out your turnover, you simply need to add up all income from sales within a set amount of time, subtracting any trade discounts, product returns and VAT (if applicable). You can then subtract the cost of those sales to produce your gross profit, and all other expenses for your net profit.
The tax under section 44AD of the Income Tax Act is calculated at 8% of the total gross turnover (or 6% for digital transactions) provided that the annual turnover is below Rs. 2 crores (Rs. 3 crores if 95% of receipts are through online modes).
A 20% turnover means 20% of something has been replaced or sold within a period, commonly referring to employee turnover (20% of staff left) or portfolio turnover (20% of investment assets traded), both indicating the rate of change, with high rates often signaling issues like poor culture or active (potentially costly) trading, though low turnover in investments often suggests a buy-and-hold strategy.
Quality of Life Difference: Canada has more space and a diverse natural setting, while The Netherlands has unmatched balance between work and life, meticulously managed infrastructure, and a mild climate with winters.
How much money do I need for early retirement in Netherlands? Early retirement in Netherlands typically requires 33-50x your annual expenses due to Box 3 tax impact. For example, if you need €50,000 per year, you'll need €1.65-€2.5 million in total capital.