Dutch employers, such as Utrecht University, are required to deduct tax from the employee’s salary. This is in order to prevent the employee from having to pay a substantial amount of wage tax at the end of the year. The employer transfers the withheld amounts to the Tax Office.
- Foreign employees who are obliged to pay wage tax in the Netherlands can, upon meeting certain specific conditions, be considered for a partial tax exemption. Read about the 30% scheme below.
- In case of exceptional circumstances, a foreign employee employed with Utrecht University can be fully exempted from paying wage tax in the Netherlands. The Tax Office will have to issue a tax exemption statement to this effect.
Paying less wage tax: the 30% scheme
Under specific circumstances, as a foreign employee, you are entitled to a 30% reduction in wage tax. This is directly settled through the salary. In order to be eligible for this scheme, you will have to meet a number of conditions, e.g. a minimum salary and the so-called ‘kilometre condition’. The minimum salary requirement does not apply to scientific staff. The kilometre condition implies that the employee must have lived more than 150 kilometres away from the Dutch borders during at least 16 of the 24 months preceding the first day of employment.
When you wish to apply for the 30% scheme, you will have to submit a statement to the Tax Office, which will subsequently check whether you meet the requirements.
Employees in the Netherlands may be eligible for tax deductions. These deductions are based on your personal circumstances, such as the level of your income. Most tax deductions are settled directly through the salary. Only a few tax deductions must be individually cleared with the Tax Office. The Tax Office can inform you whether such a tax deduction applies to your situation.
Utrecht University also deducts pension premiums from your salary. These premiums are transferred to the ABP Pension Fund that the university, based on the Collective Labour Agreement for the Dutch Universities (CAO NU), participates in. The pension fund manages the accrual of your pension rights. Read more information about the ABP Pension Fund on the ABP website.
Everyone living in the Netherlands must submit an annual income tax return. Tax is imposed on your income. You usually pay this amount on a monthly basis via your university salary. If you don’t receive a salary from the university, but, for instance, a grant from your home country, you are still subject to taxation. If you don’t submit a tax return, the Tax Office will make an estimation of the height of your income: you will then receive a tax assessment as well as a default penalty. If you need assistance in submitting your tax return, please contact the ISD.