Amsterdamse gracht

Direct tax

Direct taxes are taxes that are collected by the tax authorities from the taxpayer. This is usually done through a tax return. In addition, some taxes are not paid directly by the taxpayer, but a third party does this. This is the case, for example, with payroll tax.

Although the term direct taxes suggests that the tax must be paid directly to the tax authorities, this is not always the case. There are certain cases where the taxpayer does not pay the tax, but where this is done by another party. For example, an employer retains wage tax before the salary is paid out. However, this wage tax is covered by the tax liability of the employee, the employer is only the party that pays the tax due. Even in the case of transfer tax, the taxpayer (the buyer of the house) does not pay the tax, but this is done by the notary.

The opposite of direct taxes is the indirect taxes. These are consumption taxes, such as VAT and excise duties. These are not directly paid by the consumer to the tax authorities. This is what the entrepreneur does. However, as with direct taxes, the taxpayer also pays the tax to the tax authorities in the event of indirect taxes. The entrepreneur has a tax liability for VAT and excise duty and therefore transfers the indirect taxes to the tax authorities. The costs (the tax) are then passed on in the consumer price.

Forms of direct taxes are:

  • personal income tax
  • wealth tax
  • inheritance tax
  • corporate income tax
  • payroll tax
  • dividend tax
  • gambling tax
  • environmental duties
  • transfer tax