Changes to the income tax system mean that the average employee in the Netherlands will take home more money in their first wage packet in 2019 than they did in December 2018 - even without having received a pay increase.
According to new calculations by the Ministry of Social Affairs and Employment (SZW), the majority of people in employment will receive an extra 1% to 2.5% in net pay. Middle-income earners will profit the most from the tax changes.
But people entitled to welfare benefits or pensions will also notice an increase, thanks to the higher 2019 general tax credit and the fact that benefit payments increase in line with inflation. Although pensioners with a supplementary pension of €10,000 (US$11,420) will receive 0.2% less from their retirement fund than they did in December, they will also receive around €30 (US$34.26) more from their state pension (AOW) each month.
Although take-home pay is rising, VAT is also increasing from 6% to 9% in 2019, which will result in higher prices for goods and services. Taxes on energy and health insurance premiums are also on the up, I Am Expat reported.
But according to the SZW, higher net incomes should compensate for price rises for the majority of households, with a huge 96% expected to profit from the boost to net pay. On average, purchasing power will also grow by 1.6%.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
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Changes to the income tax system mean that the average employee in the Netherlands will take home more money in their first wage packet in 2019 than they did in December 2018 - even without having received a pay increase.
According to new calculations by the Ministry of Social Affairs and Employment (SZW), the majority of people in employment will receive an extra 1% to 2.5% in net pay. Middle-income earners will profit the most from the tax changes.
But people entitled to welfare benefits or pensions will also notice an increase, thanks to the higher 2019 general tax credit and the fact that benefit payments increase in line with inflation. Although pensioners with a supplementary pension of €10,000 (US$11,420) will receive 0.2% less from their retirement fund than they did in December, they will also receive around €30 (US$34.26) more from their state pension (AOW) each month.
Although take-home pay is rising, VAT is also increasing from 6% to 9% in 2019, which will result in higher prices for goods and services. Taxes on energy and health insurance premiums are also on the up, I Am Expat reported.
But according to the SZW, higher net incomes should compensate for price rises for the majority of households, with a huge 96% expected to profit from the boost to net pay. On average, purchasing power will also grow by 1.6%.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
OTHER STORIES THAT MAY INTEREST YOU
Long-term illness transition fee to be compensated in the Netherlands
Expats in the Netherlands seek legal advice over tax changes