Everyone has the right to credits on taxes to be paid: the general tax credit. On top of that, you may receive additional credits.
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Tax credits consist of a national insurance contributions component and a tax component (not the elderly person’s tax credit and the single elderly person’s tax credit). The component that you will receive depends on your situation.
If you have compulsory insurance in The Netherlands, then you are entitled to the national insurance component of your tax credit. If you are not insured for national insurance, then you are not entitled to this. If you want to know when you are or are not insured and how the national insurance is levied, please see The levying of national insurance contributions.
If you live abroad and are a taxpayer in The Netherlands, then you are not automatically entitled to the tax component of your tax credit. You are only entitled to this if you choose to be treated as a resident taxpayer, or if you are a resident of Germany, Belgium, Suriname, the Dutch Antilles or Aruba.
You are always entitled to the tax component of the employed person’s tax credit, even if you do not choose to be treated as a resident tax payer. You must then satisfy the criteria for the employed person’s tax credit.
In the Netherlands, the Tax and Customs Administration levies the income tax and the national insurance contributions for AOW, ANW and AWBZ as one aggregate amount. For this reason, the tax credits relate to both income tax and national insurance contributions.
For 2008, the 33.60% levy you owe in bracket 1 on your Box 1 income (see Tax rates) consists of:
Example
In 2008, the general tax credit amounts to € 2,074. For persons under 65, the component of the general tax credit that relates to income tax amounts to 2.45/33.60 part of € 2,074 = € 151 in 2008.
The tax credit cannot exceed the combined income levy. The combined income levy is the total amount of taxes and national insurance contributions that you owe on the taxable income in Boxes 1, 2 and 3.
For an overview of the tax credits, please refer to Overview of tax credits. The terms are also defined in the Glossary.
