Personal income tax rates 2020
Personal income tax rates 2020 for income from (former and/or self-) employment and home ownership (also referred to as “box 1”):
| Annual taxable income in 2020 (€) | Not more than 68.507 | More than 68.507 | |
| Tax rate | 37,35% | 49,50% | |
Reached the AOW (State pension) age and born after 1945 | |||
| Annual taxable income in 2020 (€) | Not more than 34.712 | More than 34.712 but not more than 68.507 | More than 68.507 |
| Tax rate | 19,45% | 37,35% | 49,50% |
Reached the AOW age and born before 1946 | |||
| Annual taxable income in 2020 (€) | Not more than 35.375 | More than 35.375 but not more than 68.507 | More than 68.507 |
| Tax rate | 19,45% | 37,35% | 49,50% |
The income-related health insurance contribution (a mandatory fixed contribution from your income or benefit) will be reduced by 0.25% this year. This applies to the contribution from your income, which your employer does, as well to benefit entitled persons and self employed. See the table below for the applicable rates:
| 2020 | 2019 | |
| Employer contribution (high contribution) | 6,70% | 6,95% |
| Contribution of e.g benefit entitled persons & self employ (low contribution) | 5,45% | 5,70% |
Please note that several tax rebates (“heffingskortingen”) may apply. They lower the tax and premium payable. These tax rebates have been increased for 2020. See the table below for the applicable rates:
| 2020 | 2019 | |
| Maximum general tax rebate under AOW age (€) | 2.711 | 2.477 |
| Maximum general tax rebate above AOW age (€) | 1.413 | 1.268 |
| Maximum labour tax rebate (€) | 3.819 | 3.399 |
| Maximum income-related combination tax rebate (€) | 2.881 | 2.835 |
| Young disables person tax rebate (€) | 749 | 737 |
| Elderly person tax rebate (€) | 1.622 | 1.596 |
| Single elderly person tax rebate (€) | 436 | 429 |
| Tax rebate green investments | 0,7% | 0,7% |
Personal income tax rate 2020 for income from substantial share ownership, applicable when owning 5% or more of the shares in a limited company (also referred to as “box 2”): 26,25% flat tax rate (2019: 25%) on all earnings following from these shares, such as dividends and capital gain.
Personal income tax rate 2020 for income from equity: 30% flat tax rate on (progressive) deemed interest made on equity. In brief equity can be summarized as (worldwide held) assets minus (worldwide held) debts. The point of departure is the value of the equity per beginning (January 1st) of the relevant tax year. Based upon this value the deemed taxable income (benefit from savings and investments) is calculated.
The tax burden on your assets in box 3 in 2020 is 0.54% to 1.60%, depending on the size of these assets. See the table below for the applicable rates:
| Of the part of the equity that is higher than (€) | But not more than (€) | Deemed interest is | The income tax as % of box 3 equity is |
| 0 (partners: 0) | 72.797 (partners: 145.594) | 67% + 0,06% + 33% + 5,33% = 1,7991% | 0,54% |
| 72.797 (partners: 145.594) | 1.005.572 (partners: 2.011.144) | 21% + 0,06% + 79% + 5,33% = 4,2233% | 1,27% |
| 1.005.572 (partners: 2.011.144) | – | 0% + 0,06% + 100% + 5,33% = 5,33% | 1,60% |
Personal income tax rates applicable for tax year 2019.
Personal income tax rates 2019 for income from (former and/or self-) employment and home ownership (also referred to as “box 1”):
Personal income tax rate 2019 for income from substantial share ownership, applicable when owning 5% or more of the shares in a limited company (also referred to as “box 2”): 25% flat tax rate on all earnings following from these shares, such as dividends and capital gain.
Personal income tax rate 2019 for income from equity: 30% flat tax rate on (progressive) deemed interest made on equity. In brief equity can be summarized as (worldwide held) assets minus (worldwide held) debts. The point of departure is the value of the equity per beginning (January 1st) of the relevant tax year. Based upon this value the deemed taxable income (benefit from savings and investments) is calculated.
The benefit from savings and investments is set at 0.13% of the part of the basis for savings and investments that belongs to yield class I, plus 5.60% of the part of that basis that belongs to yield class II. The height of the part of the basis for saving and investing that belongs to yield class I or yield class II, is determined on the basis of the following table*:
An example of the above equity tax table: A single individual has an equity of € 130,360 per January 1st 2019. After applying the threshold a taxable equity remains of € 100,000. The actual income made on this equity is not relevant, nor is relevant how this equity has been invested, e.g. as bank savings and/or (partially) invested in stock. Both the taxable interest as well as the kind of investment is fictitious. The first € 71,650 is effectively deemed to have made an interest income of 1.935% (67% x 0.13% plus 33% x 5,6%) is € 1,386. The second part € 100,000 -/- € 71,650 = € 28,350 is effectively deemed to have made an interest income of 4.451% (21% x 0.13% plus 79% x 5,6%) is € 1,261. Total deemed interest is 2,647 x 30% tax = total amount on equity tax is € 794.
The idea behind the two different yield classes is that individuals with more equity are deemed to take more risk by investing in stock, yield class I is the low interest bank savings account and yield class II are the higher interest giving stocks. There is however no counter proof possibility within the law for individuals with a high amount on equity put in low interest bank saving accounts. Based upon case law dealing with double interest fictions, there may be a counter proof possibility in case the actual interest is at least 10% lower than the deemed interest. Court procedures are expected regarding the above explained equity deemed interest income system. Be sure to object on time.
