Is it expensive to employ individuals in the Netherlands because of the relatively high tax rates?
Admittedly, the Netherlands has a reputation as a high tax country—with its top tax rate at 52%. On the other hand, the taxable basis in the Netherlands is limited. For example, capital gains are tax-free and mortgage interest paid for a principal residence is fully tax deductible. The 30% ruling reduces the taxable base for foreign employees even further, resulting in an effective top tax rate of 36.4% on employment income. Also, employer costs are relatively limited. Employer social security contributions, for example, are capped. Overall, the tax burden can compete favourably with many European jurisdictions.
