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2020 Dutch Tax changes Summary

The Netherlands. Many laws and regulations have become effective at the start of the new year. Amidst the numerous news, we collected the most important tax introductions and revisions. If you are planning to register a company in the Netherlands or you are currently running one, the following list will prove to be useful.


Tax Brackets

A new change has been introduced as of 2020, instead of 3 brackets, the tax office will work with 2. Earnings up to €68.507 will be taxed at 37,35%, while earnings over that limit will be taxed at 49,5%. As both rates have come down, a lot of people will benefit from higher net salaries.


Tax credits

The tax credit on work and the general tax credit applied to everyone went up, again boosting take-home pay. People earning between €20.000 and € 35.000 benefit the most from the increase.


Tax Break

For self-employed people, the tax break will be lowered from €7.280 to €7.030. This is a revision along the lines of the government’s strategy of cutting the deduction down to €5.000 by 2028. In simple words, self-employed individual will pay more tax by this particular case (other changes may offset the situation).


Self-Employed VAT

New VAT identification numbers will be provided to self-employed people and sole traders for privacy reasons. Previously the VAT number contained the social security number of the interested person. As per 2020 changes have been applied to protect the entrepreneurs. The new VAT identification numbers contain the land code, 9 random numbers, the letter B, and two numbers of control.

To be completely clear, the ‘new’ VAT must be used for external communications. On the other hand, the ‘old’ VAT identification number should continue to be used for correspondences with the Dutch Tax Authorities.


Small business scheme (KOR)

Entrepreneurs with a turnover under €20,000 can apply for exemption from paying VAT. Participating in the small business scheme means entrepreneurs with VAT exemption no longer charge their customers VAT on their invoices. In addition, they are no longer required to fill in a VAT return, nor will they be able to deduct VAT paid by them from their monthly or quarterly VAT returns. They are also exempt from keeping VAT records. This only applies to goods and services they have provided inside the Netherlands.

Unsure or still confused by the many additions and modifications? Plan a free consultation with our expert. Follow the link: https://www.yanincorporation.com/netherlands-contactus


References:

https://business.gov.nl/subsidy/small-businesses-scheme/

https://www.bdo.global/en-gb/microsites/tax-newsletters/indirect-tax-news/issue-4-2019/netherlands-new-vat-identification-numbers-for-some

https://www.iamexpat.nl/expat-info/dutch-expat-news/taxes-netherlands-2020-whats-changing


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