Money in the Netherlands

Personal experience

Tetyana Zinchenko

Software tester

My name is Tanya and for the last 5 years I have been living in the Netherlands – in Haarlem. It is quite a big city by local standards, about 10 minutes drive from Amsterdam. I have a residence permit, which allows me to enjoy almost all rights, including the right to vote, and have almost all the responsibilities of local residents.

Taxes

Taxes in the Netherlands are the biggest pain point for our expats. The bulk of those who go back do so precisely because of taxes: they are high.

If you don’t look closely, there are only three taxes:

Income tax, which everyone who lives or earns income in the Netherlands has to pay.
Salary tax, which is paid by the employer on each employee. Every month the employer sends a special slip to the employee, which describes how much and what taxes and levies are withheld from the salary.
BTW (aka the analogue of our VAT). There are three different kinds: 0%, 9% and 21% (this one is the most frequently charged).

Taxes are charged monthly, but once a year there is a period when you can ask for a refund of some of the taxes paid. This can be done if you have:

A non-working partner (the refund on this part is decreasing every year, in the coming years it is planned to be removed altogether).
Mortgage.
Additional income, including from investments.
Health expenses not covered by insurance.
Training costs.

In addition, for highly qualified specialists from other countries there is a 30% discount on taxes for the first 5 years of work in the country. This means that only 70 per cent of the salary is taxed, and 30 per cent goes to the person “in the clear”.

There are various tax credits for people with low income: for health insurance, rent, unemployment benefit, child allowance.

There are also additional taxes that can be quite substantial and quite annoying. For example, tax on imports (goods bought abroad), inheritance, winnings and even on gifts.

Savings, deposits, investments

Savings, deposits and investments are taxed. Therefore, people often spend their savings on something that will generate income but will not be taxed. For example, installing solar panels on the roof of your house. The state gives privileges and encourages such an initiative in every possible way. Plus surplus electricity can be given back to the grid and receive a small amount of money for it.

On deposit accounts it is possible to have up to 21 000 euros, which will not be taxed.

The so-called buy-to-let mortgage is particularly popular: people take out a mortgage on their home in order to rent it out in the future. Rental prices in the Netherlands are higher than mortgage payments, so they often cover both the mortgage payment and the property tax.

Since 2019, the Peaks service – a special offer for micro-investments – has started to gain momentum. At the moment, only Rabobank is supported, but other major banks are planning to join the fray. The idea is that investments are not made in specific companies, but in portfolios. Each portfolio contains stocks and bonds of different companies or loans to the government, each portfolio differs in risk and profitability. But the overall result is an investment in fairly stable index funds. The best part is that you don’t need tens of thousands of euros to invest, as it used to be. Peaks allows you to invest amounts from 1 euro.

Medicine

Medicine in the Netherlands is divided into three parts:

Long-term treatment of chronic diseases.
Basic medical care: infrequent visits to the doctor or short visits to hospitals.
Supportive care: dentists, physiotherapy, cosmetic treatments.

The first point in any treatment is always the huisarts (in our analogy, the family doctor). He makes an initial examination and decides what to do next: to send you home and provide you with paracetamol or to refer you for additional examinations to specialised doctors.

Medicine in the Netherlands is one of the best in the world. But people from Russia are often dissatisfied with it: here no one creates panic on the spot, which they are used to. For example, no doctor will prescribe antibiotics as a preventive measure. And yes, antibiotics can only be bought with a prescription. Paracetamol, cough syrup, vitamins and plasters, for example, are sold without a prescription.

Insurance is compulsory. Basic insurance for the poor is covered by the state. It includes: meeting with a family doctor, hospital stay and first aid, some types of medical products, dental care for children up to 18 years old. It costs about 100 euros per month.

«I can’t complain about our medicine. Recently my dad came home and collapsed on the doorstep. Mum didn’t hesitate and immediately called an ambulance. The ambulance was here in 10 minutes. But we have volunteers with the right to provide first aid. One of our neighbours is one of them. The ambulance called him before it left and he was the first on the scene, just a couple of minutes after the incident. Thanks to his competent actions in those first crucial minutes, my dad survived.».

Matthaus, worker

Housing

In my city the prices are not very different from Amsterdam. To rent a separate room costs from 300 euros, a separate flat can cost 2500 euros, depending on the neighbourhood and the cost of housing.

A two-bedroom house with an area of 80 sq.m. in the centre of Haarlem 5 years ago cost 1600 euros a month. Since then prices have almost doubled.

The rent usually consists of 2 parts: the rent and the extra charges (electricity, internet, water, etc.). The rent is absolutely legal and taxable, so it is mandatory to sign a contract. To conclude the contract, you will need not only identity documents, but also documents confirming your income. For example, a copy of the employment contract, in which the monthly salary is spelled out.

Rent is more expensive than a mortgage. Mortgage can be taken, even without being a citizen of the country, but the interest on it will be higher. The bank agrees to lend only 5 annual salaries. Therefore, the higher the salary, the higher the mortgage amount you can count on and the better housing you can buy.

«I had been renting a house for several years and then I decided to sell it. It turned out that there was a clause in the tenancy agreement that said I couldn’t just evict the tenants, because they were paying rent. I spent about a year and a lot of money on lawyers and litigation, but it didn’t work. I had to sell the house together with the tenants and because of that I lost several tens of thousands of euros in the value of the house.» .

Willem, manager

Nutrition

The Netherlands has a rich history of international commodity exchanges. This could not help but have an impact on their cuisine. Since the 18th century, one of the main ingredients in all dishes has been the potato.

A standard meal is briefly called AVG and includes potatoes (aardappel), meat (vlees) and vegetables (groenten). A popular dish is stamppot: mashed potatoes with some other ingredients, such as sauerkraut or boiled carrots. Usually served with sausage and meat gravy.

The Dutch hardly ever eat soup: for example, we have a “soup day” in our office once a week. Hot meals (any warm food) are served once a day, usually at 6pm. The afternoon meal is sandwiches. And, of course, a lot of coffee.

Transport

Transport fares depend on the destination and the length of the journey. For example, the Haarlem-Amsterdam train costs me €4.50 one-way. The tram from Central Station to work is €1.27.

Having said that, there are several transport companies and they offer various subscriptions to their services and discounted season tickets. You can buy them for a section of the journey (for example, from home to work for all modes of transport) or for a period of time. For example, I have a season ticket that allows me to drive at weekends at a 40% discount – and for that I pay 50 euros a year.

Petrol prices depend not only on the make and brand of the petrol station, but also on the day of the week. Depending on congestion, the price of petrol at the same petrol station can vary by a few cents.

For example, the price of a litre of Euro95 at the Tango Tango petrol station varies from €1.67 to €1.59 depending on the day of the week. This is to regulate the flow and avoid queues: people who want to save money will prefer to fill up at the weekend rather than on Monday morning.

Children and education

Child benefits are provided automatically after birth and depend on the age of the child, the number of children in the family and whether the children work (from the age of 13 each child can have a part-time job during holidays).

In addition, the state helps to raise the child and partially covers the costs of clothing, food and school fees. This is provided for single parents and low-income families. If the total family income exceeds 143,415 euros, this help is not available.

For working parents, the state partially pays for childcare: integration courses, children’s centres or babysitters. The state pays for a maximum of 230 hours of such care per month and only for children who have not yet completed primary school (up to the age of 12).

There are two types of schools in the Netherlands: state (public) and special schools. Special schools can be either schools of a special region or of a particular specialisation (e.g. Montessori schools, international schools)

The school system includes 3 levels: elementary school (from 4-5 years and up to 12 years), secondary education and higher school. The tertiary school is divided into three streams based on academic performance.

VMBO is the stream where students with low academic performance get into. After graduation, they can enter colleges and get working specialities.
VWO is a stream that accepts students with average academic performance. After completion, they will be ready to enter university.
HAVO – a stream of pupils who will be doing science in depth.

The streams are not separated into different classes, everyone is together. But to one pupil the teacher will give additional tasks and will not control the fulfilment, to the second one he will approach from time to time, and to the third one he will constantly help with elementary tasks.

It should be noted that higher education here is not the holy grail and it is not necessary for a bus driver or a supermarket clerk. Many people prefer to get a working speciality rather than spend 5-6 years and extra money on university studies.

Pension

The pension system is made up of three components, and the final amount of your pension depends on how much money you get from each component, and whether it’s there at all.

1: The “state” pension. Paid to people who lived or worked in the Netherlands between the ages of 15 and 65 at 2% for each year. The maximum you can get in this part is: about €700 for each partner if they live together, and about €1,000 for a single person.

2: “Collective” pension. Depends on the specific arrangements with the company where the person works/worked. Companies may set aside some amount each month in the employee’s account and then work with that money. The employee does not receive it, but can choose to work with this money. More than 90 per cent of employees do exactly that.

3: “Personalised” pension. This includes everything a person has earned for their own retirement: property, contributions, investments.

The retirement age is gradually being raised and in 2018 it was 66. From 2022, the retirement age will be linked to life expectancy.

You can retire earlier, the principle of pension accrual will not change. But the state and collective parts of the pension will be lower, so unless a person has large savings of their own, early retirement can lead to a life of austerity.

Salaries

Salaries in the Netherlands are usually quoted in total for the year and before tax. Salaries also include 8% holiday pay, which is paid annually in May, but you can ask for a yearly breakdown and receive it monthly.

In addition to salaries, you can expect additional bonuses from companies such as: covering transport or mobile phone costs, providing a company car, paying for relocation to another country.

Archaeology/History – 1,800 euros
Physiotherapy – €2,000
International Business, Languages – 2,050 euros
Industrial Design – 2,200 euros
Accounting – 2,300 euros
Management, Economics, Law – 2,300 euros
Artificial Intelligence – 2,400 euros
Business – 2,500 euros
IT – 2,700 euros
Fiscal Economics – 3,000 euros
Medicine – 3,200 euros
Dentistry – 4,000 euros
Entertainment

Haarlem is a fairly large city by local standards. Historically, the wealthy people of Amsterdam bought houses in Haarlem after retiring from business and spent their old age here. This is still the case today, which is why the city is as affordable as Amsterdam.

We have a lot of free festivals. For example, the traditional annual Haarlem Jazz and More, which attracts people from all over the country and the surrounding area. No less traditional is the world-famous Flower Parade. The city is jam-packed on these days and the main streets are closed to traffic. Haarlem’s Christmas Fair has been voted one of the top ten fairs in the country for several years in a row. There’s also plenty of local entertainment, like FoodTrack festivals, where mostly only residents of the city and surrounding areas gather.

One popular attraction here is Jopenkerk, a church building that now houses the Jopen Brewery. It’s a top tourist spot with prices slightly above the city average. For dinner for two you can leave 50-60 euros, for a beer with snacks in the bar – from 20 euros.

This price is the average price in the city. Dinner in a good cafe costs about 20-30 euros for two people, a restaurant will cost from 50 and more. Prices in Michelin restaurants start from 40-50 euros per person.

A popular place is the cinema. There are several of them in our city, ranging from “mass consumption” to cinemas that show only auteur cinema. Ticket prices vary depending on the type of show (2D, 3D, IMAX) and range from 10.50 to 15.50 euros per ticket. A variety of discount and bonus systems are in place. For example, I have a Gold Card, which allows you to go for free to the sessions plus 25% discount on popcorn and other delights. It costs 28 euros a month and pays for itself when you see 2 films a month.

 

What else

What I can’t get used to is the total electronisation of everything.

All taxes and utilities are automatically deducted from your bank account. All issues are handled via email. Yes, even the tax office and city administration solves most questions by mail. You have to go there as a last resort, for example, I went only once to get my driving licence.

In the tax office I was also once, when I registered my sole proprietorship. For 4 years of working as a freelancer, I have never been there once.

All payments are non-cash, even in the markets. People have almost no cash.

It’s very convenient until you go outside the Netherlands and find out that now you’ve had a delicious meal in a restaurant and you have nothing to pay with, because they don’t accept cards and you just don’t have cash.

So
Going to the Netherlands for money is not worth it.
All the expats I know who have travelled back to their home country have done so precisely because they went here for the big money and were very unpleasantly amazed and upset by the number of payments and the amount of taxes and fees. The fact that a bus driver earns only a few thousand a year less than an IT guy also upset them.
According to recent studies, the Netherlands is one of the happiest countries in the world. But this is definitely not because its inhabitants have millions of euros in their savings accounts. You can come here for security, a high standard of living, the opportunity to travel and to gain work experience in the head offices of world-renowned companies. It is better to go somewhere else for fast career growth or multiple permanent salary increases.