Withholding Tax (Voorheffing)
A withholding tax (voorheffing) is tax that is already withheld or paid before your final tax assessment is issued. The two most important withholding taxes in the Netherlands are <a href="/en/glossary/payroll-tax">payroll tax</a> (withheld by your employer) and dividend tax (withheld on dividend distributions). When you file your <a href="/en/glossary/tax-return">tax return</a>, withholding taxes are offset against the income tax owed. Did you pay more through withholding taxes than you ultimately owe? Then you get the difference back. Did you pay too little in withholding tax, then you need to pay the difference.
Example
Your employer withholds €14,000 in payroll tax from your salary. After filing, your total income tax turns out to be €12,500. The difference of €1,500 is returned to you as a tax refund.
Why does this matter?
Withholding taxes ensure you don't have to pay a large lump sum in tax all at once. As an employee you barely notice, but if you have income besides your salary, it's good to check whether your withholding taxes are sufficient.
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