The tax credit reduces the initial tax calculation to effectively give an initial portion of earnings that are tax and National Insurance free. It is similar to a tax-free allowance and is sometimes referred to as such.
The system is complicated because differing tax credits are awarded against the several types of deduction. In addition, individuals may claim tax credits linked to personal circumstances (age, disability, dependents etc). The employer can apply the payroll tax reduction solely when the employee has submitted a written request do so. See also the example form (declaration of wage tax data belastingdienst.nl).
Non-residents of the Netherlands are not entitled
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Web page updated on 17 Mar 2025 15:31