Box Tax System Explained — Netherlands

Employment income, freelance/self-employment profits, pension income, benefits (unemployment, disability), primary residence imputed rental value. This is where most people pay taxes. Progressive rates 35.75% to 49.5%.

First bracket: 35.75% up to €38,883. Second bracket: 37.56% from €38,883 to €78,426. Third bracket: 49.5% above €78,426. State pension (AOW) included in rates. High earners pay nearly 50% marginal rate.

Most deductions (mortgage interest, self-employed costs, donations) reduce Box 1 income. Tax credits also applied to Box 1 tax. This is where you optimize by maximizing deductions.

Income from substantial interest: owning 5%+ shares in company (you or partner). Includes dividends and gains from selling shares. Common for entrepreneurs and business owners. Does not include regular stock investments.

Flat 26.9% tax on Box 2 income - lower than Box 1 top rate. This is why many entrepreneurs pay themselves partly in dividends rather than all salary. Tax planning opportunity. No deductions or credits apply.

Since 2025, 30% ruling holders can no longer elect partial non-resident status, so Box 2 applies to them like other residents (transition until end of 2026 for rulings granted before 2024).

Bank accounts, stocks, bonds, crypto, investment property (not main residence), foreign real estate, valuable possessions. Everything except pension and main home. Measured January 1st each year - value on that day determines tax.

Don't pay tax on actual gains. Tax based on deemed return: government assumes 6.04% return on your assets. This deemed return taxed at 36% = effective 2.17% tax on asset value. Whether you earned 10% or -5% doesn't matter - pay tax on deemed 6.04%.

First €59,357 in assets tax-free (€118,714 for tax partners/couples) in 2026. Only wealth above threshold taxed. Example: €100,000 assets = €40,643 taxable = ~€880 tax. Threshold adjusted yearly for inflation.

30% ruling holders could previously elect partial non-resident status and skip Box 3. This was abolished from 2025; only rulings granted before 2024 keep it until the end of 2026. New expats pay Box 3 like other residents.