Your income tax return in the Netherlands, explained

It’s March and you’re living in the Netherlands. That usually means two things: unpredictable weather and it’s time to start thinking about your Dutch income tax return (aangifte inkomstenbelasting).

Every year between 1 March and 1 May, millions of people log in to the website of the Dutch Tax Administration (Belastingdienst) to submit their income tax return. If you live and work in the Netherlands as an expat, this applies to you too. Read on for a clear explanation of how Dutch income tax works and a step-by-step guide to filling out your return.

Note: Peaks is not a tax adviser and does not provide personalised fiscal advice. Tax rules are subject to change and individual circumstances differ.

Key things to know about income tax in the Netherlands

The Dutch tax system can feel overwhelming at first, especially if you’re new to the country. The key things to remember are:

• You file for the previous year.

• Income is divided into three boxes.

• Savings and investments are taxed under box 3, usually based on assumed returns.

• You may be entitled to a refund.

If your situation involves foreign income, the 30% ruling, or assets abroad, it would be wise to seek professional advice to ensure you comply with Dutch tax rules.

What is a Dutch income tax return?

Income tax (inkomstenbelasting) is the tax you pay on income such as:

• Your salary

• Interest earned on savings

• Investment returns

Through your annual tax return, you inform the Dutch Tax Administration how much income you received in the previous year. Based on that information, they calculate how much tax you owe – or whether you are entitled to a refund.

Important: you always file your return for the previous calendar year. So in 2026, you file your return for 2025.

Good to know for Peaks users: certain financial institutions, including Peaks, automatically submit the required information to the Dutch Tax Administration. That means part of your data may already be pre-filled when you log in to complete your return.

Is filing a tax return mandatory?

Not everyone is required to file a Dutch income tax return, but most people are.

If you receive a letter (or digital notification in your Mijn Belastingdienst account) stating that you must file a return, then it is mandatory. Failing to do so can result in a fine.

Even if you haven't received a paper letter, check your online tax portal. Many official communications in the Netherlands are sent digitally.

Tax boxes and tax brackets: what do they mean?

When you start your Dutch tax return, you will encounter two key concepts: tax boxes and tax brackets.

Tax boxes

The Dutch system divides income into three “boxes”. Each box has its own rules and tax rates.

Tax brackets in box 1

Box 1 uses progressive tax brackets. For 2025 (the year you declare in 2026), the rates are:

The Netherlands has a progressive tax system. This means higher income levels are taxed at higher rates.

However, the higher rate only applies to the part of your income that falls within that bracket.

For example:

If you earn €47,000 in 2025, you pay:

• 35.82% on the first €38,441

• 37.48% on the remaining amount

Box 3: savings and investments work differently

Box 3 is structured differently from boxes 1 and 2. Instead of progressive brackets, there is one flat tax rate: 36% (in 2025 and 2026).

However, box 3 works with assumed (fictitious) returns rather than your actual return, unless you opt to declare your real return.

For 2025, the Dutch Tax Administration assumes:

You then pay 36% tax on those assumed returns, based on the value of your assets on 1 January of that year.

Example in simple terms:

• 36% of 1.37% of your bank balance

• 36% of 5.88% of your investments

If your actual return was lower than the assumed return, you can declare your real return instead. This may prevent you from paying too much tax.

As an expat, it’s especially important to check whether you qualify as a full or partial tax resident and whether foreign assets must be declared.

Income from your main home

In box 1, you may see “income from owner-occupied home” (inkomsten uit eigen woning).

The Dutch system assumes homeowners build up wealth because their property may increase in value. Therefore, homeowners must declare a notional income called the eigenwoningforfait. This is calculated as a percentage of the official property value (WOZ-waarde).

If you own additional properties, those usually fall under box 3 instead.

How does a tax refund work?

If you are employed, your employer usually withholds wage tax from your salary throughout the year. That means you often pay income tax automatically.

It is possible that too much tax has been withheld. When you file your annual return, the calculation may show that you are entitled to a refund.

Refunds can also result from tax credits and deductible expenses.

What are tax credits?

Tax credits (heffingskortingen) reduce the amount of income tax you owe.

For example:

• The general tax credit

• The labour tax credit (for people who work)

These credits lower your final tax bill.

What are deductible expenses?

Deductible expenses (aftrekposten) are specific costs you can subtract from your taxable income. This lowers your total taxable income and therefore reduces the tax you pay.

Examples include:

• Certain commuting costs

• Specific home-related costs

• Contributions to a supplementary pension account (like a Peaks pension account)

• Certain healthcare costs

Each deduction has strict conditions. Always check the official guidelines in your tax return or consult a tax adviser if your situation is complex, especially if you have income or assets in multiple countries.

Submitting your tax return as an expat in the Netherlands

Once you understand how the Dutch income tax system is structured — and where your own situation fits within it — filing your return becomes far less intimidating and much easier to approach with confidence, even as an expat navigating it for the first time. If you’d like a step-by-step guide to filing your Dutch income tax return, open this blog to start the process.

Disclaimer

The information in this article is provided for general informational purposes only and does not constitute tax, legal or financial advice. Peaks is not a tax adviser and does not provide personalised fiscal advice. Tax rules are subject to change and individual circumstances differ. Always consult a qualified tax adviser or the Dutch Tax Administration (Belastingdienst) to assess how the rules apply to your specific situation.