Local government depends heavily on central government funding

In terms of public spending, the Netherlands was one of the ten most decentralised countries in the European Union (EU) in 2019. In the Netherlands, more than 30 percent of all government spending is done by the two levels of local government together. Local government income in the Netherlands accounts for 7.9 percent of the entire government’s total income. In all more decentralised EU countries, local government has a larger share of own income than in the Netherlands.

Share of own income 6 percentage points lower over two decades

The local government's own income in the Netherlands increased from 21 billion euros in 2000 to 28.1 billion euros in 2019. Most of this increase occurred in the years up to 2008. In the aftermath of the financial crisis, the local government's own income remained stable at around 26 billion euros per year in the years 2009 to 2013. From 2014 onwards, the local government's own income increased slightly annually to 28.1 billion euros in 2019.
The share of own income in the local government's total income fell from 33.0 percent in 2000 to 27.2 percent in 2019. This was due to the fact that the remaining income, which consists almost entirely of transfers from central government, rose faster than the local government's own income. With the decentralisation of the social domain in 2015, the remaining income of the local government increased by 6 billion euros. The additional tasks given to municipalities were mainly financed centrally through transfers from central government. The share of own income thus decreased from 29.7 percent in 2014 to 28.1 percent in 2015. After that, this share continued to decline, to 27.2 percent in 2019.