Netherlands

This chapter includes data on the income taxes paid by workers, their social security contributions, the family benefits they receive in the form of cash transfers as well as the social security contributions and payroll taxes paid by their employers. Results reported include the marginal and average tax burden for eight different family types.

Methodological information is available for personal income tax systems, compulsory social security contributions to schemes operated within the government sector, universal cash transfers as well as recent changes in the tax/benefit system. The methodology also includes the parameter values and tax equations.

    

The national currency is the Euro (EUR). In 2019, EUR 0.89 was equal to USD 1. In that year, the average worker earned EUR 53 198 (Secretariat estimate).1

1. Personal Income Tax System (Central Government)

1.1. Central government income tax

There are three categories (‘boxes’) of taxable income:

• Taxable income from work and owner-occupied housing;

• Taxable income from a substantial interest in a limited liability company;

• Taxable income from savings and investments.

This description is limited to the most relevant aspects of taxable income from the first category, ‘taxable income from work and owner-occupied housing’, because of its relevance for the AW.

1.1.1. Tax unit

Husbands and wives are taxed separately on their personal income, which includes income from business, profession and employment, pensions and social security benefits. Certain parts of income may be freely split between husbands and wives, such as the net-income from owner occupied housing and the income from savings and investments.

1.1.2. Tax allowances

1.1.2.1. Standard allowances

1.1.2.2. Non-standard allowances applicable to AW

Related to wage earnings:

• For distances of more than 10 km between home and work, fixed amounts for travel expenses with public transportation are deductible. The maximum deduction for employees who travel by public transport is EUR 2 116 for distances of more than 80 km. If the travel expenses are reimbursed or the employer provides transport, there is no deduction; the reimbursement is untaxed (also for employees who travel by car) if it is below certain specified amounts.

• Employee contributions to private (company provided) pension schemes.

• Related to owner occupied housing:

  • Excess of mortgage interest over net imputed rent.

• Related to personal circumstances:

  • Medical expenses and other exceptional expenses: Fiscal deduction of exceptional health expenses is reduced to the specific costs as a result of a chronic illness. As specific costs are seen medical treatment (not paid for by insurance company), diet costs, special medicine described by a doctor, extra domestic care, special expenses for clothing and transportation costs. Visual tools and insurance premiums are not seen as specific costs and are therefore not deductible. Expenses for wheelchairs, scooters for the disabled and home adjustments made because of a chronic illness are not deductible.

• All expenses except for medical treatment expenses may be increased by a factor. This factor is income and age dependent. The factor amounts to 1.4 if the person is below the legal pension age and has an income on or below EUR 34 817. The factor amounts to 2.13 if the person is on or above the legal pension age and has an income on or below EUR 34 817. People with an income above EUR 34 817 cannot apply the factor.

• For a single person: the specific expenses (after multiplication with the factor) in excess of 1.65% of income are deductible if income exceeds EUR 7 739 and is below EUR 41 107. If income is lower than or equal to EUR 7 739, the non-deductible limit is EUR 133. For a person with a partner: the joint income is used to determine the non-deductible amounts and the non-deductible limit is EUR 266.

• If income exceeds EUR 41 107 the specific expenses in excess of 1.65% of EUR 41 107 increased with 5.75% of income above EUR 41 107 are deductible.

• Some educational expenses: in direct connection with vocational education. Expenses above the threshold of EUR 250 are deductible. Expenses above EUR 15 000 are not deductible.

• Donations to certain institutions (charity) that serve the public good are deductible if in excess of 1% of the income and in excess of EUR 60. No more than 10% of the income may be deducted in this way.

1.1.3. Tax schedule

The tax schedule for income from work and owner-occupied housing is as follows:

Taxable Income (EUR)	Tax Rate (%)	Social security contributions
		< 65 years	> 65 years
0–20 384	9.0	27.65	9.65
20 384–34 300	10.45	27.65	9.65
34 300–68 507	38.10	-	-
68 507 and over	51.75		-

The contributions for the general social security schemes are levied on income from work and owner-occupied housing in the first and second income tax bracket. These social security contributions are not deductible for income tax purposes. Individuals of 65 years and older pay 9.65% (for widows and orphans pensions, and exceptional medical expenses). Individuals younger than 65 years and a few month pay 27.65%, (for widows and orphans pensions, exceptional medical expenses, and old age income provision). For further information see Section 2.1.

1.1.4. Tax credits

1.1.4.1. Standard tax credits

The tax credits are deducted partly from the income tax liability and partly from the contributions that are made to the general social security schemes (see Section 1.13). For most families, the share of the credit attributed to tax is related to the ratio of the tax rate to the sum of the tax rate and the social security contributions rate in the first bracket of the tax schedule. In 2019, this ratio was 24.56% (= 9.00% / (9.00% + 27.65%), implying that 24.56% of the (tax) credit is attributed to the personal income tax and the remaining 75.44% to social security contributions. If the individual’s total tax credit is higher than the total tax and social security contributions levied on the first tax bracket, the shares of the residual amount of the tax credit that are attributed to the personal income tax and social security contributions are based on the rates in the second tax bracket in order that the employee can benefit from the full amount of the credit where the level of income allows it. As a result, the ratio of the tax rate to the sum of the tax rate and social security contribution rates is increased to 27.43% for the residual amount in 2019 (i.e. 10.45%/(27.65%+10.45%)).

Division of credits for tax and social security contributions is essential in the OECD publications. In the Netherlands no division is made in the general tax scheme between tax and SSC.

Note that the tax/benefit position tables show the total amount of social security contributions net of the credits that are claimed.

• General tax credit: The general tax credit is dependent on income since 2014, meaning that higher incomes receive less general tax credit. Since 2016, the general tax credit is fully phased out, meaning that higher incomes receive no general tax credit. In 2019, the maximum of the general tax credit is EUR 2 477 when no reduction is applicable (people who are on or above the legal pension age receive less general tax credit, because they do not pay social contributions for the state pension) and taxable income is below or equal to EUR 20 384. For incomes above this threshold, the general tax credit is fully phased out at a rate of 5.147% (per euro). So incomes above EUR 68 507 receive no general tax credit. The transfer of the general tax credit of the spouse to the principal will diminish with 6.67%-points per year in the period 2009-2023, such that in 15 year time the general tax credit for a non-working (or a low earning) spouse cannot be capitalised against the tax paid by the principal. In 2019, 26.67% of the general tax credit can be transferred.

• This reduction of the transfer of the general tax credit started in 2009. In 2023, the general tax credit can only be capitalised against the tax and social security contributions paid on own earned income. In 2012, a reduction of the general tax credit for non-working spouses born after 31 December 1962 and before 1 January 1972 is introduced. The reduction will be equal to the reduction of non-working spouses born before 1 January 1963 in year 2015. For Household types in the Taxing Wages model no difference is made between year of birth before 1963 or after 1963, idem before or after 1972. For that reason, the additional reduction of the general tax credit is not added to the Taxing Wages model.

• Work credit: The amount of work credit depends on taxable income from work and is phased in on two trajectories; the first one runs from EUR 0 to EUR 9 694. On this first trajectory, work credit equals 1.754% of taxable income from work. On the second trajectory, which runs from EUR 9 694 to EUR 20 940, the work credit equals EUR 170 plus 28.712% of the part of income that is above EUR 9 694. So at an income of EUR 20 940, the maximum of EUR 3 399 is reached. The work credit stays at its maximum to an income of EUR 34 060. After this threshold, the work credit is fully phased out at a rate of 6.0% (per euro) so that incomes above EUR 90 710 receive no work credit. 2016 is the first year in which higher incomes receive no work credit.

• Income dependant combination credit: A taxpayer who is either a single parent and working or the working partner with the lowest income, and who has children below the age of 12 and has his/her taxable income from work exceeding EUR 4 993, is entitled to an income dependent combination credit of 11.45% of taxable income from work above EUR 4 993. The maximum total combination credit is EUR 2 835 and reached at an income level of EUR 29 753.

• Single parent credit: abolished since 2015.

• Additional single parent credit: abolished since 2015.

• Elderly tax credit: individuals above the pension age receive a tax credit of EUR 1 596 if their income is below EUR 36 783. This tax credit is gradually phased out to 0 at a rate of 15.0% for incomes above EUR 36 783. Individuals above the pension age who do not have a partner receive an additional tax credit of EUR 429 that is not income dependent.

The amount of the tax credit is limited to the amount of tax and premiums payable (non-refundable tax credit). If, however, a taxpayer with insufficient income to fully exploit his/her tax credit has a partner with a surplus of tax and premiums payable over his/her own tax credit, the tax credit of the former taxpayer is increased by (at most) the surplus tax and premiums payable by his/her fiscal partner. The cap for this increase is at 26.67% of sum of the general tax credit, the work credit and the income dependent combination credit. As a consequence, the tax credit of the former taxpayer will exceed tax and premiums payable, resulting in a payout of the residual tax credit to the taxpayer by the tax authority.

1.2. State and local income taxes

None.

2. Compulsory Social Security Contributions to Schemes Operated Within the Government Sector

2.1. Employees’ contributions

General schemes (for everyone earning income from (former) employment)

• Old age pension: The age is adjusted such that elderly will receive Old Age (state) pension at the age of 66 years and 4 months old in 2019 and at 67 years old in 2024. The Old age premium percentage is 17.9% of taxable income in the first and second tax bracket. This scheme does not apply to individuals above the current pension age.

• Widows and orphans pension: 0.10% of taxable income in the first and second tax bracket.

• Long-term care: 9.65% of taxable income in the first and second tax bracket.

Schemes for employees:

• Unemployment: 0% of the gross earnings below EUR 55 927 (this contribution is only for the general unemployment fund); employees do not have to pay an unemployment premium in order to reduce administration costs. Employers pay both an unemployment premium and a premium for invalidity for their employees (see par.2.2).

• For basic health insurance each adult pays an average amount of EUR 1 384 a year to a self-chosen private health insurance company. This premium is a non-tax compulsory payment and it is not included in the Taxing Wages calculations but only in the NTCP calculations.

• Employees might obtain compensation for the nominal contribution of on average EUR 1 384 for the basic health insurance, depending on the household’s personal situation and taxable income. This is called the health care benefit. This benefit is included in the NTCP calculations as it compensates for the basic health insurance premium of on average EUR 1 384 (see www.oecd.org/ctp/taxingwages for more details on non-tax compulsory payments as well as the Special Feature in the 2009 edition of the Taxing Wages Report). The care benefit is calculated as follows:

  • Single parent households: 1609 – 2.005% * 20 941–13.52% * (taxable income – 20 941)

  • Married couples: number of adults * 1609 – 4.315% *20 941– 13.52% * (taxable income principal and spouse – 20 941).

2.2. Employers’ contributions

Schemes for employers:

• Unemployment: 3.60% of gross earnings below EUR 55 927 for the general unemployment fund and a contribution on average of 0.77% of gross earnings below EUR 55 927 for the industrial insurance associations redundancy payments fund;

• Invalidity: 8.20% of gross earnings below EUR 55 927;

• For medical care employers contribute 6.95% of gross earnings net of employees’ pension premiums and unemployment social security contributions until a maximum of gross earnings of EUR 55 927. This contribution is modelled as a NTCP from the employer to the Health Care Fund. The spending of this fund mainly compensates private insurance companies for their (public) obligation to insure individuals with a high health risk.

3. Universal Cash Transfers

3.1. Transfers related to marital status

None.

3.2. Transfers for dependent children

Families with children receive a tax free benefit, depending on the number and age of the children. For a family with two children in the age group of 6 to 12 years, the total benefit amounts to EUR 2 148 a year.

An additional income dependent child benefit exists for low-income families (kindgebonden budget). This benefit also depends on the number of children per family. A family can only claim the extra child benefit when it has children under the age of 18 years old for whom it also receives the tax free and income independent child benefit. The maximum value is EUR 1 166 per year for families with one child in 2019. The maximum value is EUR 2 155 a year for families with two children. The benefit is reduced at a rate of 6.75% per euro when the family’s yearly taxable income exceeds EUR 20 941 and is completely phased out for families with two children when the taxable income exceeds EUR 52 867. As from 2015 an extra benefit for single parents is introduced (independent of the number of children and the age of the children) which amounts to EUR 3 139 per year in 2019. This amount is also phased out at a rate of 6.75%.

4. Main Changes in the Tax/Benefit Systems Since 2000

In 2001, the tax system was changed thoroughly. The tax rates have been lowered; the basic allowance and its supplements have been transformed into tax credits. The deduction for labour costs has also been replaced by a tax credit. Certain other deductions have been reduced or abolished. Extra tax credits for households with children were introduced.

In 2002 and 2003 the tax system was only slightly changed. The additional combination credit was introduced in 2004. The various child credits were integrated and streamlined in 2006.

Public insurance for medical care has been reformed in 2006. A new standard health insurance system was introduced. Until 2005, no public health insurance contributions were levied on income in excess of EUR 33 000. However, taxpayers earning more than EUR 33 000 were obliged to take a private insurance. These private health insurance contributions were not included in the Taxing Wages calculations because they were made to a privately-managed fund (and are therefore not taxes). Since 2006, every individual contributes a nominal contribution to a privately-managed fund (on average EUR 1 064, depending on the competition between insurance companies, a year in 2009) and, in addition for employees, a percentage of gross income (6.9%) net of employees’ pension premiums and unemployment social security contributions until a maximum of gross income of EUR 32 369 (in 2009). For this last contribution, the employee receives mandatory compensation of his employer for the same amount. The premium itself, however, is not modelled (either as an employee or employer SSC) in Taxing Wages. Instead it is modelled as a non-tax compulsory payment from the employer to a public-managed health insurance fund. The spending of this fund mainly compensates private insurance companies for their (public) obligation to insure individuals with a high health risk. Taxpayers might obtain compensation for the nominal contribution to the private insurance company of on average EUR 1 064 in 2009, depending on the households personal situation and taxable income. This is called the health care benefit and is part of the NTCP (see Section 2.1).

In 2007, the tax system has not been changed, except for some parameter updates. In 2008, the child credit has been replaced by an extra child benefit.

In 2009, the general tax credit will be reduced for non-working spouses in order to cut down the capitalization of this tax credit in 2024. A non-working spouse can in 2024 capitalise the general tax credit only against his/her own earned income. In 2009 the employment credit is extended for income exceeding EUR 42 509. This credit will be reduced by maximum EUR 24, whereas the employment credit is increased for lower incomes. The income dependant combination credit is introduced in order to promote the labour participation of single parents or partners of married workers. The income-dependent combination credit has been increased considerably. The extra child benefit depends on the total income of the family and the number of children per family. The income-dependent child benefit is higher when more children under the age of 18 years are member of the family. As from 2009 onwards, employees do not have to pay an unemployment premium mainly to reduce administration costs for employers. Employers pay now both an unemployment premium and a premium for invalidity for their employees (see also par. 2.2).

In 2013, the income base for SSC and Income-Tax is harmonised. Standardising or harmonisation of the income tax base for levying SSC and Taxes is introduces in 2013 and is called the Law “WUL” i.e. Harmonising the income base for SSC and Taxes (see publication CPB the Netherlands). So, the income tax base is since 2013 exclusive the income dependant health care contribution and employees will no longer have to pay taxes over income dependant health care contributions, instead they pay a higher tax rate in the first tax bracket and mainly Work credit is adjusted. The tax rate in the first tax bracket has been increased from 1.95% to 5.85% and the Work credit is reduced for employees with a higher income such that the effect of this harmonisation is budgetary neutral.

The main adjustment in 2014 is the General tax credit which is made income dependent. Higher income will receive less general credit and the reduction is 2% per euro of income between EURO 56 495 and EURO 19 645 per year. See also par 1.141.

In 2015, the child arrangements are reduced from 10 items to 4 items. For that reason Single parent credits have stopped. Cash transfers for parents with children and low income increase. And for single parents with children an extra cash benefit of EUR 3 050 is introduced to compensate the loss of single parent credits.

Not all child arrangements are part of the TW model because these are quite specific arrangements for disabled children and parents with low income with children.

Long term health care is modernised. The SSC rate for (AWBZ Dutch) reduced with 3% to 9.65% of taxable income. The tax rates in the first two brackets are raised with 3% because Social spending is still used but now for other general social purposes.

In 2016, as part of a EUR 5 billion package of tax reductions on work, the general tax credit and the work credit were phased out fully, meaning that higher incomes no longer receive the general tax credit and the work credit.

Multiple tax credits were increased and made more income dependent in 2019. The working credit is increased, but phased out at a faster rate of 6% (instead of 3.6%). The combination credit starts at EUR 0 instead of EUR 1052, but increases with 11.45% instead of 6.159%. The elderly tax credit has been increased and is now gradually phased out at a rate of 15%, instead of a sudden drop of more than EUR 1 300 above a threshold income. Also, a first step has been made to unify the tax rates in the first three brackets. These three brackets will be combined into one new bracket in 2021.

5. Memorandum Items

5.1. Identification of the AW and calculation of the AW’s gross earnings

The calculation of the annual gross earnings of an AW is based upon data on gross earnings of full time workers in industry C-K. These data have been obtained through a yearly sample survey carried out by the Central Bureau of Statistics. Included in the AW annual salary are irregular payments, such as holiday allowances, loyalty payments and bonuses. Payments for working overtime are not included. However, the CBS has stopped carrying out the ‘employment and wages’ survey in July 2006 due to new legislation. On Inquiry at the Central Bureau of Statistics (CBS) the information from the wage declarations by employers, delivered nowadays at the tax department, will be implemented by the CBS for the new survey about employment and wages. These changes produced a delay in delivery of the information on wages and employment for 2006.

On the base of new information on wages per industry sector, the AW is delivered to EUROSTAT in November 2009 by the CBS for years 2006 and 2007. The standard classification NACE Rev. 1 for industrial sectors C-K is used.

The new classification NACE Revision 2 (sectors B-N) will be applicable as from 2008 onwards. The estimation of the AW for 2008 according to the new classification is applicable at the beginning of May 2010. The AW for 2009 is available since November 2010. For 2008 the average annual gross earnings (full-time NACE REV 2) comes to EUR 43 146, for 2009 EUR 44 412, and EUR 45 215 in 2010. The latest information according to Eurostat is an AW in 2011 of EUR 46 287 (NACE Rev 2).

No new data is found on EU site http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database.

The average wages from 2012 onwards include the private and the public sectors, since values on the private sectors only (sectors B to N) are not available. The values were provided by Statistics Netherlands.

5.2. Main employers’ contributions to private pension, health and related schemes

In addition to the obligatory contributions of employees to private insurance companies, all employers pay contributions to a public-managed health fund. More information is included in the Special Feature where the contributions to the public-managed health funds are also presented.

Employers have to pay at least 70% of the gross wage of their sick employees for two years. Many employers have insured themselves privately for the risks of their employees being sick. This insurance for illness of their employees is not compulsory.

2019 Parameter values
Average earnings/yr	Ave_earn	53 198	Secretariat estimate
minimum wage	min_wage	21 046
Social security contributions	SSC_ceil	55 927
Employees' schemes	Unemp_rate1	0
	Unemp_franchise1	0
Medical care	Med_rate	0,0695
	Med_limit	999 999
	Med_ceil	55 927
	Med_adult	1384
	Med_child	0
	Med_compensation1	0,02005
	Med_compensation2	0,13520
	Med_compenation 3	0,04315
	Med_compensation 4	0,13520
	Med_key	2 0941
	Med_adult for care benefit	1 609
General schemes	Old_rate	0,179	0,2765
	Wid_rate	0,001
	Ex_med_rate	0,0965	0,2456
	Gen_Schemes_thrsh	34 300	0,2743
	Unemp_empr1	0,036
	Unemp_empr2	0,0077
	Unemp_unempr_franchise1	0
	Unemp_unempr_franchise2	0
	Inv_empr_rate	0,0820
	Inv_empr_franchise	0
	Med_empr	0,0695
	Med_franchise	0
Payroll tax	Extra_wage_tax	0
	EWT_threshold	0
Tax schedule	Tax_sch	0,0900	20384
	"tax_sch_lowest"	0,1045	34300
	"tax_thrsh_1"	0,381	68507
	"tax_sch_2"	0,5175
Tax credits	Gen_credit_1	2 477
	Gen_credit_2	0
	Gen_credit1_thr	20 V384
	Gen_credit2_thr	68 507
	Gen_credit_per	0,05147
	Red_gen_credit	661
	Emp_credit1	170
	Emp_credit2	3 229
	Emp_credit3	0
	Emp_credit1_thr	9 694
	Emp_credit2_thr	20 940
	Emp_credit3_thr	34 060
	Emp_credit4_thr	90 710
	Comb_credit	0
	Comb_credit_franchise	4 993
	add_comb_credit	0
	income_dependant_comb_credit1	0
	income_dependant_comb_credit_max	2835
Family cash transfers	income_dependant_comb_par_credit_per	0,1145
	Sing_par_credit	0
	Ex_sing_par_credit_per	0
	Ex_sing_par_credit_max	0
	Ch1_trans	1 074
	Ch2_trans	2 148
	Child_ben_1child	1 166
	Child_ben_2children	2 155
	Extra_cash_sing_par	3 139
	Child_ben_redn	0,0675
	Child_ben_ceil	20 941
Non-tax compulsory payments	dummyNTCP	0
	NTCP_pension_ee	0,0578
	NTCP_pension_er	0,1101
	NTCP_pension_franchise	13 429
	NTCP_pension_max	107 593

2019 Tax equations

The equations for the tax system in the Netherlands in 2019 are repeated for each individual of a married couple. Tax credits, except a part of the general credit of the spouse, depend also on the tax paid by the principal if the spouse's income is zero or very low, and the cash transfers are calculated only once. The functions which are used in the equations (Taper, MIN, Tax etc) are described in the technical note on the tax equations. Due to the adjustment of the work credit in 2016, the function Emp_credit(Value) was altered in 2016. Variable names are defined in the table of parameters above, within the equations table, or are the standard variables “married” and “children”. A reference to a variable with the affix “_total” indicates the sum of the relevant variable values for the principal and spouse. And the affix “_spouse” indicates the value for the spouse. No affix is used for the principal values. Equations for a single person are as shown for the principal, with “_spouse” values taken as 0.

	Line in country table and intermediate steps	Variable name	Range	Equation
1.	Earnings (gross)	gr_earn
	Earnings (net)	earn	B	gr_earn
2.	Social security contributions	SSC_al	B	SSC_f(earn,Unemp_rate1,SSC_ceil,Unemp_franchise1)
3.	Credits in taxable income	taxbl_cr	B	MIN(earn-SSC_al, Med_ceil)*Med_rate
4.	CG taxable income	tax_inc	B	earn-SSC_al
5.	CG tax before credits	CG_tax_excl / tax_liable	B	Tax(tax_inc,Tax_sch)
6.	Tax credits	tax_cr	P	MIN(CG_tax_excl+SSC_taxinc,IF((tax_inc<Gen_credit1_thr),Gen_credit_1,(Gen_credit_1-MIN(Gen_credit_per*(Gen_credit2_thr-Gen_credit1_thr),Gen_credit_per*(tax_inc-Gen_credit1_thr))))+Emp_credit(tax_inc)+IF(AND(Children>0,tax_inc>Comb_credit_franchise),IF(Married='0,income_dependant_comb_credit1+MIN(income_dependant_comb_credit_max-income_dependant_comb_credit1,income_dependant_comb_par_credit_per*(tax_inc' - Comb_credit_franchise)),0)
		tax_cr_spouse	S	IF(Married>0,MIN(CG_tax_excl_spouse+SSC_taxinc_spouse+CG_tax_excl+SSC_taxinc-tax_cr,IF(tax_inc_spouse>0,IF((tax_inc_spouse<Gen_credit1_thr),Gen_credit_1,(Gen_credit_1-MIN(Gen_credit_per*(Gen_credit2_thr-Gen_credit1_thr),Gen_credit_per*(tax_inc_spouse-Gen_credit1_thr)))),Red_gen_credit)+Emp_credit(tax_inc_spouse)+IF(AND(Children>0,tax_inc_spouse>Comb_credit_franchise),income_dependant_comb_credit1+MIN(income_dependant_comb_credit_max-income_dependant_comb_credit1,income_dependant_comb_par_credit_per*(tax_inc_spouse - Comb_credit_franchise)),0)),0)
		tax_cr_inc	B	IF(tax_cr>Tax_thrsh_1*SUM(Old_rate+Wid_rate+Ex_med_rate+tax_sch_lowest),(tax_sch_2/SUM(Old_rate+Wid_rate+Ex_med_rate+tax_sch_2))*(tax_cr-(SUM(Old_rate+Wid_rate+Ex_med_rate+tax_sch_lowest)*Tax_thrsh_1))+(tax_sch_lowest/SUM(Old_rate+Wid_rate+Ex_med_rate+tax_sch_lowest))*(Tax_thrsh_1*SUM(Old_rate+Wid_rate+Ex_med_rate+tax_sch_lowest)),tax_sch_lowest/SUM(Old_rate+Wid_rate+Ex_med_rate+tax_sch_lowest)*tax_cr)
7.	CG tax	CG_tax	B	tax_liable-tax_cr_inc
8.	State and local taxes	local_tax	B	0
9.	Employees' soc security' based on earnings	SSC_earn	P	SSC_f(earn,Unemp_rate1,SSC_ceil,Unemp_franchise1)
		SSC_earn_spouse	S	SSC_f(earn_spouse,Unemp_rate1,SSC_ceil,Unemp_franchise1)
	Based on taxable income	SSC_taxinc	B	(Old_rate+Wid_rate+Ex_med_rate)*MINA(tax_inc,Gen_Schemes_thrsh)
	Total employees' soc security	SSC_liable	J	SSC_earn+SSC_taxinc+SSC_earn_spouse+SSC_taxinc_spouse
		tax_cr_SSC	B	IF(tax_cr>Tax_thrsh_1*SUM(Old_rate+Wid_rate+Ex_med_rate+tax_sch_lowest),((Old_rate+Wid_rate+Ex_med_rate)/SUM(Old_rate+Wid_rate+Ex_med_rate+tax_sch_2))*(tax_cr-(SUM(Old_rate+Wid_rate+Ex_med_rate+tax_sch_lowest)*Tax_thrsh_1))+((Old_rate+Wid_rate+Ex_med_rate)/SUM(Old_rate+Wid_rate+Ex_med_rate+tax_sch_lowest))*(Tax_thrsh_1*SUM(Old_rate+Wid_rate+Ex_med_rate+tax_sch_lowest)),SUM(Old_rate+Wid_rate+Ex_med_rate)/SUM(Old_rate+Wid_rate+Ex_med_rate+tax_sch_lowest)*tax_cr)
	Total	SSC	J	SSC_liable-tax_cr_SSC
10.	Total payments	total_payments	J	CG_tax+local_tax+SSC
11.	Cash transfers	cash_trans	J	IF(Children=1,Ch1_trans,IF(Children=2,Ch2_trans,0))+ IF(Children=2;1;0)*MAX(0;(Child_ben_2children+IF(Married='0;1;0)*Extra_cash_sing_par-IF((tax)inc+tax_inc_spouse)>Child_ben_ceil;1;0)*' Child_ ben_redn*(tax_inc+tax_inc_spouse – Child_ben_ceil)))
13.	Employer's soc security	SSC_empr	B	Function Emp_credit(Value) If Value <= 0 Then Emp_credit = 0 ElseIf Value <= Range("Emp_credit1_thr").Value Then Emp_credit = (Value / Range("Emp_credit1_thr").Value) * Range("Emp_credit1").Value ElseIf Value <= Range("Emp_credit2_thr").Value Then Emp_credit = Range("Emp_credit1").Value + ((Value - Range("Emp_credit1_thr").Value) / (Range("Emp_credit2_thr").Value - Range("Emp_credit1_thr").Value)) * Range("Emp_credit2").Value ElseIf Value <= Range("Emp_credit3_thr").Value Then Emp_credit = Range("Emp_credit1").Value + Range("Emp_credit2").Value ElseIf Value <= Range("Emp_credit4_thr").Value Then Emp_credit = Range("Emp_credit1").Value + Range("Emp_credit2").Value - ((Value - Range("Emp_credit3_thr").Value) / (Range("Emp_credit4_thr").Value - Range("Emp_credit3_thr").Value)) * (Range("Emp_credit2").Value - Range("Emp_credit3").Value) Else Emp_credit = 0 End If End Function
Key to range of equations B calculated separately for both principal earner and spouse P calculated for principal only (value taken as 0 for spouse calculation) J calculated once only on a joint basis.

Note

← 1. The Dutch labour market is characterized by a substantial share of part-time employees. As explained in the methodological section of this volume, the average wage measure used in the tax burden calculations refer to full-time employees only. If the wages of part-timers were taken into account, the average wage would be substantially lower.