Salary taxes in the Netherlands

Employers in the Netherlands have to calculate and pay salary taxes on the salary of their employees. Salary is everything the employee receives for their work, for example:

 

  • Wage

  • Holiday allowance

  • Overtime pay

  • Year-end bonus

  • etc

 

Employers can also pay their employees in kind, for example with meals. On top of this employers can also grant their employees entitlements, reimbursements and provisions.

Salary taxes in the Netherlands.jpg

Wage tax

Wage taxes are withheld on the wage of the employee. This is an advance levy of the Dutch income tax. The amount of wage tax due is dependant on the amount of income of the employee.

National insurance contributions

National insurance schemes can be considered social security schemes that insure all residents of the Netherlands against the financial burden of, for example, old age, death and children. The schemes consist of:

  • General old-age pensions act (Algemene Ouderdoms Wet)

  • Surviving Dependants act (Anw)

  • Long Term Care Act (Wet langdurige zorg, Wlz)

  • General Child benefit act (AKW) (optional)

 

Employed persons’ insurance contributions

Employed persons’ insurance contributions are obliged by Dutch law. These schemes protect employees from the financial burden of, for example, illness and unemployment. the schemes consist of:

  • Sickness Benefits Act (Zorgverzekeringswet)

  • Invalidity Insurance Act (Wet arbeidsongeschiktheid) / Work and income according to Work Capacity Act (WIA)

  • Unemployment Insurance Act (Werkloosheidswet)

Income-dependant contribution pursuant to the Health Care Insurance Act (Zvw)

In the Netherlands, all employees are required to have health care. Therefore they will pay a contribution to a health care insurer. In addition to this, employers are obliged, according to the Health Care Insurance Act (Zvw), to pay a contribution as well. The amount of taxes due are depending on the income of the employee.

The above-mentioned elements are applicable to all employees working in the Netherlands. For employees working in the Netherlands but residing outside of the Netherlands (more than 150 km from the border and some other requirements) the 30% ruling can be applied. See our article regarding this subject.

We can help you figure out whether these contributions are due or whether you or an employee are entitled to the 30% ruling.


 

Underneath is an example of the 30% ruling with the minimum wage of € 4.500 for highly skilled migrants.

 

Based on this salary slip, the employer can calculate that his total employer’s expenses will be:


 

Gross monthly wage € 4500

 

Holiday pay + storage of holiday pay (reservation) € 432

 

Social security charges € 619.29

 

Total employer's costs € 5551.29

 

Withholding Salary Taxes: € 1.350

 

Nett Income: € 3.721 (received in the bank account by the employee)



 

This overview assumes that the employee is tax resident in the Netherlands if not, extra tax incentives will apply, and he will not pay the full taxes. An exemption for social securities and taxes can be applied for, in several cases when an employee is working less than 183 days in the Netherlands. 

 

We can help you figure out whether these contributions are due or whether you or an employee are entitled to the 30% ruling.

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