Loonheffingskorting is a discount on the taxes you pay on your salary in the Netherlands. It’s essentially an advance payment on the tax credit you’ll receive at the end of the year.
Here’s a breakdown of how it works:
- Your employer withholds income tax and social security contributions from your salary before you receive it. This is called “loonheffing” in Dutch.
- Loonheffingskorting reduces the amount of tax withheld from your paycheck. This means you take home more money each month.
- The amount of loonheffingskorting you receive depends on several factors, including your age, income, and marital status. There are two main components:
- Algemene heffingskorting (General tax credit): This is a basic tax credit that everyone in the Netherlands receives.
- Arbeidskorting (Work discount): This is an additional tax credit for people who are working or receiving a benefit for being unable to work. The amount of arbeidskorting increases with your income up to a certain point.
Here are some benefits of loonheffingskorting:
- You get to keep more of your money each month.
- It simplifies the tax filing process at the end of the year.
Here are some things to keep in mind about loonheffingskorting:
- You can only request loonheffingskorting from one employer. If you have multiple jobs, you will only receive the discount from your primary employer.
- If you earn more than a certain amount, you may have to pay back some of the loonheffingskorting you received at the end of the year.
For more information on loonheffingskorting, you can visit the website of the Dutch Belastingdienst (Tax Authority): https://www.belastingdienst.nl/wps/wcm/connect/en/individuals/individuals
I hope this explanation helps! Let me know if you have any other questions.