Taxes and finance

Moving to the Netherlands means learning about financial matters, but there is a lot to like. The Dutch offer one of the strongest social security systems in the world, offering a safety net in and out of work with unemployment benefits, healthcare coverage and pensions. All funded through a progressive tax system. Once you start working your emloyer will handle your income tax and social security contributions. Depending on your situation you may be eligible to allowances for housing, healthcare or childcare.

Opening a bank account

Your first practical step to arrange your finances is to open a Dutch bank account. You will need this to receive your salary, pay rent, transfer money to friends or set up direct debits for contracts. To open a Dutch bank account, you need to select a bank and account that suits your requirements. The biggest banks in the Netherlands include ABN AMRO, ING, Rabobank, bunq and ASN Bank. Most banks offer services in English and have mobile apps for easy banking. To open a private bank account, you can visit the nearest bank office or visit the website to make an appointment online. Most banks charge an annual fee for banking with them. If you apply online, it usually takes a few working days to open your account and receive your bank card and account details. To open a bank account you need:

Proof of identity (passport or EU ID card)
If you are from a country outside the EU/EEA, your residence permit document
Proof of address in the Netherlands, such as an extract of your municipal registration
Citizen service number (BSN)
If you are a student, proof of enrolment at the university

Opening a bank account without a BSN

Several banks allow EU nationals tp temporarily open a bank account without a BSN. You need to register your BSN within 90 days of opening the account. Non-EU/EEA nationals can also open an account. However, their account remains blocked until they provide an extract from the BRP after registration.

In the Netherlands, most payments are usually made by debit card, which takes money directly from your current account. Cash (euros) is used less often. In some stores you can only use debit cards (alleen pinnen). Credit cards are not widely accepted outside hotels, online bookings and car rentals. Supermarkets only accept cash and debit cards. To withdraw cash, look out for the yellow ATM machines called Geldmaat, often located near shopping streets and markets. iDeal (soon Wero) is the Netherlands’ most popular online payment system – used for takeaway and online shopping. You need to have a Dutch bank account to use iDeal. Digital wallets like Apple and Google Pay are gaining popularity as many people pay with their phones.

Taxes

When you start living and working in the Netherlands, you are required to pay taxes. The Dutch tax system is split into national and local levels. National taxes include VAT sales and income tax, which is paid on earnings, savings, and investments. The income tax rate is progressive, which means you will be taxed according to your income. Taxes are collected by the Dutch Tax Administration (Belastingdienst). Income tax is automatically deducted from your salary by your employer throughout the year. Residents are required to file an annual income tax return between March and May to verify the amount of taxes, which can be done with a phone app. Freelancers and business owners calculate their own income tax and often seek assistance from accountants or tax advisers. Local taxes, on the other hand, are set by local municipalities and water boards to cover services like waste collection, sewage, water purification and property, road and dog taxes.

M-form

For your first year in the Netherlands, you have to use a special migration form for your tax return, also called the M-form. You will receive this form by post, but it is also possible to complete it online. Unfortunately, the form is only available in Dutch. There is an extended deadline for the form. Many newcomers use a tax adviser for the first year. After the first year, you can digitally fill in all upcoming tax returns.

Expat or 30% tax ruling

Highly skilled internationals working in the Netherlands may be eligible for a special income tax break to compensate for the additional costs to relocate to the Netherlands, such as for travel, housing, education and childcare. The expat ruling is a tax-free allowance for internationals who have been recruited from abroad for a specific position. Under this tax scheme, for a maximum of five years an employer can pay you 30% of your salary tax-free (27% from 2027) and only the remaining 70% is subject to income tax. Recipients of the ruling can also exchange a foreign driving licence without taking a test and get a tax-free reimbursement for international school fees of your children.

Employers apply for the tax incentive at the Dutch Tax Administration on behalf of employees. Employees need to be recruited from outside of the Netherlands (more than 150km from the border) and have a specific expertise hardly found on the Dutch labour market. You have a specific expertise if your annual salary, not including the tax-free allowance, exceeds €48,013 or €36,497 if you are younger than 30 and have a Master's degree. Scientific researcher do not have a salary limit.

Social security

Almost everyone who lives and works in the Netherlands contributes to the Dutch social security system. In return, the government can offer financial protection when facing life circumstances, such as illness, job loss, disability, retirement or raising children. The Dutch social security system is characterised by two insurance types: employee insurance (managed by UWV), which covers salaried workers for unemployment (WW), sick leave and disability benefits (WIA), and national insurance (managed by SVB), which covers all residents for state pensions (AOW), child allowances and long-term care.

Most Dutch invest in additional private or collective pension funds. In addition, there are benefits (toeslagen, managed by the Belastingdienst) aimed at supporting households by helping them cover the costs of rent, health insurance and childcare. Important to know: Dutch social security does not cover healthcare. Health insurance is mandatory for all residents in the Netherlands, and must be purchased from a private health insurance provider.

Are you socially secured in the Netherlands?

You may not be insured under the Dutch social security system if you are only temporary in the Netherlands, work for an international organisation or embassy, are a international student, or are still employed by a foreign employer. You can also not take out Dutch health insurance. If you are from an EU/EEA country, Switzerland or country with a social security agreement with the Netherlands, you may be entitled to chose to be socially ensured in your own country. You can apply for a A1 certificate to proof this.