...and what are the consequences tax-wise?

What happened to my gross salary!

Many foreign employees are in for a shock when they see the difference between their gross and net salary on their first Dutch payslip. 'What happened?', they ask themselves. Let us try to explain the situation in a bit more detail.

If you have an employment contract in the Netherlands, you will be obliged to pay income tax. You are not required to file a tax return for this form of taxation: your employer will withhold the relevant amount from your salary and transfer it to the tax authorities. If you have a normal employment contract, this deduction will be relatively close to the amount you are required to pay in taxes for the year. The amount paid out to the Tax Authorities by your employer is roughly the same as the difference between your gross and net salary. The Netherlands applies a progressive tax system, based on about four different tax brackets. This means the amount of tax deducted from your salary depends on how much you earn and your specific tax bracket (the amount can vary between 33% and 52% of your gross salary, depending on your situation).

Doing part-time work in addition to your duties as an employed researcher

If you are employed as a researcher and take on a part-time job, you may enter a higher tax bracket and thus be required to pay more taxes. Both your employers are required to pay income tax over your earnings as if they were your sole employer. However, since the total sum of your income from both employers may have placed you in a higher tax bracket, the amount that the individual employer transfers to the tax authorities may be too low. This will become clear when you file your individual income tax return. 

When withholding income tax, your employer will take into account a tax rebate (up to a maximum of € 2,000) and employment rebate (up to a maximum of € 1,500). These rebates will be deducted from the amount of income tax paid out to the tax authorities. If you have two jobs, you will earn more and be eligible for a higher rebate percentage. However, only one of your two employers may apply this rebate when withholding your income tax. As a result, you may miss out on part of your rebate and your employers may withhold too much income tax. You may then be eligible for a refund from the tax authorities, but this will not become clear until you have filed your own income tax return.

Moreover, your employer will pay out income tax on the basis of your annual salary. If you have worked less than a year, your employer may have transferred too much income tax over your earnings to the tax authorities. 

If you are living in the Netherlands and derive income from work abroad in addition to your work as a researcher, you will be required to specify this additional source of income on your Dutch tax return. Whether or not you will actually be required to pay tax over these wages in the Netherlands will depend on the tax arrangements between the country you work in and the Netherlands.  

Paid employment in addition to your research scholarship

You may be considering filing a tax return in the hope of receiving a rebate from the tax authorities. However, if you receive a scholarship (without an employment contract) and are also doing part-time work, you may want to think twice before doing so. Most scholarships are regarded as income, which means you will be taxed over both your scholarship and the amount you earn at your part-time job. This means it may turn out that you are required to pay more instead of receiving a rebate when you file your tax return. Once you are in the system, you will automatically receive an annual request to file a tax return, and you will not be able to choose whether you wish to do so or not.

Filing a trial digital tax return

If you would like to check whether you have paid too much or too little tax, you can fill out a digital tax return on the basis of your annual tax statement at the website of the Belastingdienst (unfortunately, the programme is only available in Dutch). As long as you do not digitally sign and submit the tax return, it will only serve as a trial return for your own personal use.