13 september 2023
Payroll Taxes in the Netherlands
A complete guide
Over the salary that personnel is paid, an employer is obligated to pay taxes. Due to Dutch law, these payroll taxes can be quite difficult to navigate. The amount of the salary can vary due to level, experience or worked hours. In addition to the basic salary, an employee might also receive payment in the form of bonus, commision, overtime pay or other benefits.
These taxes need to be paid on time and in compliance with Dutch law. It can be quite a difficult task to navigate these payroll taxes, due to the complexity of the law. To help you make it a bit clearer, we have created a complete guide of all the payroll taxes in the Netherlands. At the end of the article, some benefits of employing the help of an Employer of Records in the Netherlands (disclaimer: the numbers and percentages in this article mentioned may vary since writing of September 2023).
Types of payroll taxes in the Netherlands
Taxes come in all shapes, sizes and kinds. This is also the case for payroll taxes in the Netherlands. Different taxes have different levies and to know which goes where, below you can find the types of payroll taxes that are being levied in the Netherlands.
Wage tax in the Netherlands is a progressive income tax that is withheld from employees’ wages. The tax rate ranges from 2.3% to 52%, depending on the employee’s income. The wage tax is calculated on the employee’s gross salary, which is the total amount of money they earn before any deductions are made. The wage tax is then withheld from the employee’s paycheck and paid to the government. The wage tax is not applied to all forms of income. For example, it is not applied to: Benefits in kind, such as company cars or housing, pensions, social security benefits, scholarships and prize money.
National insurance contributions
These are paid by both employers and employees. The employer’s contribution is 27.65% of the employee’s gross salary, and the employee’s contribution is 9.75%. These contributions fund old-age pensions, disability benefits, and unemployment benefits.The national insurance contributions are not applied to benefits in kind, pensions, social security benefits, scholarships and prize money.
Employed person’s insurance contributions
For a change, these taxes are only paid by employees. The contribution rate is 17.9% of the employee’s gross salary. These contributions fund sickness benefits and occupational injury benefits. Also the employed person’s insurance contributions are not applied to all forms of income as the wage tax and national insurance contributions are excluded.
Income-dependent contribution pursuant to the Health Care Insurance Act (Zvw)
Same as the employed person’s insurance contributions, this type of tax is also a tax that is paid by employees and self-employed individuals. The contribution rate is 6.68% of the employee’s or self-employed individual’s gross income, up to a maximum of €57,232. This means that if an employee or self-employed individual earns more than €57,232 per year, they will only pay €3,835 in income-dependent contribution. The income-dependent contribution is used to fund the Dutch healthcare system. It is not applied to income that is below the personal allowance, which is €37,149 in 2023. It is also not applied to income that is earned from benefits, such as unemployment benefits or disability benefits. The income-dependent contribution is a progressive tax, which means that the tax rate increases as the income increases. For example, an employee who earns €50,000 per year will pay €3,340 in income-dependent contribution, while an employee who earns €100,000 per year will pay €6,680.
In addition to these taxes, employers may also need to withhold tax from payments to non-resident employees. The withholding tax rate depends on the employee’s residency and the type of payment.
How an Employer of Record can help you
An employer of record (EOR), like Employer of Record in the Netherlands, can help with payroll taxes by taking on the responsibility of calculating, withholding, and filing payroll taxes. This can save you, the employer, a lot of time and hassle. Furthermore, it helps to ensure that the payroll taxes are compliant with Dutch tax laws. Yet, these aren’t the only upsides of using the expertise of an Employer of Record. Here are some of the benefits of using an EOR for payroll taxes in the Netherlands:
- The EOR will take care of all the calculations and paperwork, so you don’t have to.
- The EOR will ensure that you are compliant with Dutch tax laws.
- The EOR can help you to save money on payroll taxes.
- The EOR can provide you with peace of mind knowing that your payroll taxes are being handled correctly.
Employer of Record in the Netherlands
If you are considering hiring employees or expanding your business in the Netherlands, it is important to understand the country’s payroll tax laws. An Employer of Record can help you to navigate these laws and ensure that you are compliant. This way you can keep your time and energy where it matters most: with your business. Dutch Employer of Record is the specialized Employer of Record in the Netherlands. Whether it is the process of team relocation or entire departments to the Netherlands, we help organizations. On the other hand, we also offer aid with hiring a highly skilled migrant. Are you ready to start growing your business? Well, get in touch to see how we can help you do that.