It’s nice to live in a country that actually gives some of the money it collects in taxes back to the population, rather than blowing it all on military aggression. On the other hand, they certainly do know how to collect their pound of flesh here; dear oh dear.
Let’s look at cars, for example, where it all starts with the purchase. Not only does one have to contend with BTW (Belasting Toegevoegde Waarde), the Dutch VAT, at 19%; but there’s also BPM (Belasting op Personenauto’s en Motorrijwielen), the tax on passenger vechicles and motorbikes. That clocks in at a staggering 45.2%. There are slightly different formulas for petrol and diesel engines, but what it amounts to is that between 56.5% and 65.8% of the price is tax. If one compares car prices here with those of the same models in the US, one almost faints from the shock.
Then we have motorrijtuigenbelasting, motor vehicle tax. The amount you pay depends on where you live, whether you have a diesel, petrol or LPG vehicle, and the weight of the vehicle (SUV owners beware!). Noord-Holland is the province with the lowest tax (don’t ask me why), but reckon on €700+ per year for a 1750 kg vehicle.
And the petrol? Thanks to the combination of excise and BTW, 67.2% of the price per litre at the pump goes to the government; and this country has the highest petrol prices in all of Europe. If you have a diesel car, that’s 56.9%. LPG vehicle owners escape with a measly 28.1% tax obligation.
Even the damn car insurance premium is taxed with assurantiebelasting, insurance tax at 7%.
Man, paying for that new Audi A6 in January is going to be fun.
And what about our new house? Well, it’s not new, which is to say that somebody already owns it. That means we have to pay overdrachtsbelasting, transfer tax, at 6%. If it were newly built, it would be even worse, as we’d have to pay BTW at 19%.
Then, of course, we have property tax or onroerende-zaakbelasting, as it’s known here. This differs by city, but is broken down into two parts: an owner’s part and a user’s part. The owner is simply the owner of the property, the user the person who lives there. If the owner and the user are the same person, that person is responsible for paying both parts. The existence of a user’s part may have led you to conclude that property tax is also paid here by people who rent property, as well as people who own it. This is correct.
In Amsterdam, the formula for the owner’s part is €1.44 per €2268 of property value. The user’s part is €1.15 per €2268 of property value. For the purposes of this formula, the property value is not the purchase price. Rather, it is the Waardering Onroerende Zaken (WOZ) value of the property, which is a value assigned to it by a local council assessment, which takes place every few years. This is generally lower than the actual purchase price of the property.
Ignoring the minor yearly fees for sewage and water management, we’re left with the eigenwoningforfait, literally the ‘own home forfeiture’. This is a tax on woongenot or — wait for it — living enjoyment. That’s right, the Dutch government taxes you, based on the assumption that you will derive pleasure from living in property that you own.
For property with a value greater than €75,000, the amount calculated is 0.6% of the WOZ value of the property, with a maximum of €8500. However, this is not the amount of actual tax you pay. Rather, that amount is considered to be extra income, so it’s added to your annual income and consequently taxed as such, so you pay according to whichever income tax bracket you happen to fall into.
They say there are only two things you can be sure of in this life. Firstly, you will pay taxes. Secondly, you will die. Tja…
I haven’t done more than scratch the surface, of course. Vermogensrendementsheffing (asset tax), income tax and a host of others are enough to make your toes curl.
The fact that the government here levies taxes hardly makes it unique, but it does levy a lot of them in comparison with other countries. In spite of this, I’m happy to be back, as I feel that the money is more constructively and wisely spent than in many other places; certainly than in the US, my erstwhile abode.
Jeez, Ian, you sound like Fox, only giving the bad news to make us angry and tune in for more after the break!
I guess that is why the standard of living is equal for most people and why there is hardly any poverty…
What you fail to mention is that paid interest is tax deductible, making having a mortgage very lucrative. Not to mention no capital gains tax; making doing some – even low risk – investment very profitable.
Of course there the is wealth tax, but at 1% (I believe) of your net worth, you would have to be a incredibly poor (tax free!) investor not to make more a lot more than that even in the safest goverment bonds and guarantee yourself a nice annual income. (My guess is that is why it is tax free, to stimulate people to invest as much as possible; interest on savings accounts is added to your income)
Hoi Ian, you seem to be forgetting that the Netherlands does spend taxpayers on military agression. Why else would the bunch of idiot Christian conservatives that are currently running the show and fucking up this country have sent troops to Iraq???!!!
You compared me to Fox. I don’t believe it! It’s a good thing we’re friends. đŸ™‚
I guess I didn’t make my point clearly enough: I, too, feel that these taxes are worth paying, because there’s evidence to suggest that a significant portion of the funds collected from society are later returned to that same society in the form of social security, education, etc.
We knew about all (well, most) of these taxes when making the decision to return here from the US and still we came back, regardless. From that, you can deduce that I don’t think we’re being ripped off.
Nor do I feel bad about the wealthy being taxed more than the poor. I’m much more of a socialist than a capitalist at heart.
You’re correct that I didn’t mention that interest on mortgage payments is tax-deductible; deductible from income tax, that is. I don’t consider that to be the same thing as a mortgage being lucrative, though. After all, the only person who makes money from a mortgage is the lender. If that weren’t the case, the lenders would be holding on to their money and investing it elsewhere.
You’re also correct that I didn’t mention the absence of capital gains tax, which was a very welcome bonus in returning to this country.
One point where you’re possibly not correct, however, is in your last sentence, where you claim that interest on savings accounts is added to your income. To be more specific, it’s added to your so-called box 3 income, not box 1, so it’s subject to asset tax, not income tax. In this regard, it’s no different to money made from any other kind of investment.
Asset tax, by the way, assumes a 4% per annum appreciation of one’s wealth. That gain is taxed at 30%, making for an effective tax of 1.2% on one’s worth.
The purpose of my entry was really to highlight the large number of taxes over here, as well as draw attention to some of the more exaggerated or plainly ridiculous ones.
BPM, for example, is a singularly Dutch concept and does, I feel, run very high at 45.2%. Brussels isn’t happy about it, either, so who knows how much longer it will exist? I make my peace with it by telling myself that I am a pedestrian and cyclist at heart, and that owning a car is a luxury that pollutes the environment, so high tax is something I can live with.
The own home forfeiture, however, is something I find completely ridiculous. Paying tax on one’s living pleasure is absurd. Paying it in the form of income tax is beyond absurd. There is no income, for crying out loud. Home owners already pay the owner’s portion of property tax, so why is there a need to further tax them?
Ultimately, though, you should not take what I wrote as a general complaint, because that’s not what it was. Rather, it was an observation that there are a lot of taxes over here, and that I am being confronted with many of them in very rapid succession since coming home.
Again, perhaps I wasn’t clear enough. I said the Dutch government does not blow all of the money it collects in taxes on military aggression.
I am obviously not claiming that no taxpayer money finds its way into these channels, as it’s blindingly apparent that the Dutch sent troops to Afghanistan and Iraq to assist with Bush’s risible “coalition of the willing”. In this regard, they’re no better than the other cowardly European heads of state, who would rather stand by and watch as countless civilian lives are lost in the pursuit of power than stand up against America and make a foe out of a militarily and economically strong nation, run by hot-headed religious crackpots.
Let’s just try to see that things here are a lot better than they are in many other places right now. That in no way fails to acknowledge that there are some very real political and social issues here at the moment, but nor should we ignore the fact that a lot of taxpayer money still finds its way into worthy coffers.
Apperantly Singapore has a 300% tax on cars, making 54% seem like a bargain.
I know how you set it up and can imagine how much it saved you so I am sure you aren’t complaining, don’t worry!
Do you remember the pay slips from the good old days? A british one has two lines, “PAYE” (Pay As You Earn, tax) and “NI” (National Insurance). The Dutch ones have a couple of dozen different lines for different things, all at their own little rate.
Compared to other countries, deductible interest does make mortgages more attractive than in most places. (Though for most people still not as attractive as a Woningwet Woning)
300% tax? That doesn’t seem fair.
54% will never seem like a bargain to me, but like I said, I’ve made my peace with it. I’d still consider it fairer if all the EU countries levied the tax, though; or if this country abolished it. It’s ridiculous that I can drive south for two hours and buy the same car in Belgium for 25% less. Of course, I still have to pay the tax if I bring it back here to drive, but the point is that our southerly neighbours get a much better deal.
I do remember PAYE and NI from my days in England. I probably still don’t know what some of the entries on a Dutch wage slip mean. I understand, however, that they’re deductions, not credits, which is the main thing.
As for tax-deductible interest, I think most western countries offer that. Do you know of one that doesn’t?
300% is what I was told. Basicaly, Singapore wants less cars, the place is too small and over populated.
What counts, really, is overall spending power. These Belgians may pay a lot more for other goods and services or simply tax. I don’t know. But you are right, there is a lot of difference between the countries, which is rather strange. 25% VAT anyone? Ask the Danes, they are the experts.
What really surprises me is how in the last few years prices for consumer goods on the continent have gone up so much, England used to be much more expensive, while now the balance often swings in the other direction. Or has stuff just relatively gotten cheaper here?
As far as know, deductable mortgage interest is a unique thing in .nl. I certainly can’t do it in the UK and my Australian experts say that is also the case there.
Tax-deductable mortgage interest is definitely not unique to The Netherlands. The US offers this, too. I wouldn’t be surprised if it weren’t unique within Europe, either.
Unfortunately for future property purchasers, The Netherlands is making moves towards scrapping this privilege. Not only is Brussels putting the country under pressure, but the money to allow for this tax break is rapidly drying up.