Do you have any employees? Payroll taxes must then be deducted from the salary. These payroll taxes must be paid to the tax authorities in the Netherlands, including:
- wage tax and national insurance contributions
- employee insurance premiums
- income-related contribution to the Health Insurance Act (zvw employer’s levy and zvw contributions)
What is a wage tax?
Employers already pay wage tax to the taxing bodies, sparing you the trouble of doing it yourself later. National insurance contributions are included in wage tax in addition to the wage tax, which goes into a substantial pot that the government uses, for example, to build roads. You get money out of the final pot when you retire or get critically ill. To determine whether you have paid enough income tax, the tax authorities will review your tax return at the end of the year. In that case, you must pay the difference and might also be entitled to a refund.
Become a registered employer
To pay payroll taxes, you must register as a Netherlands employer with the Tax Authorities. After that, you will receive the following:
A payroll tax ID
The payroll tax ID will be issued along with a letter confirming the applicable differentiated premium percentage (Whk, which you contribute as Employer). This percentage varies depending on the industry.
You must use your payroll tax number whenever you file a payroll tax return or interact with the tax authorities.
Payroll tax and national insurance contributions are reduced
You may not always be required to pay the entire amount of payroll tax withheld from some of your employees; for example, because they conduct research and development (R&D). This strategy is known as remittance reductions. More information can be found in Chapter 26 of the Handbook Payroll Taxes.
Verify the identification of your employee
When hiring someone, make sure you get a written contract that includes the person’s name, address, date of birth and social security number. You verify and document the identification of your employee. Before hiring a foreign employee, you need to ensure that they are qualified to do so in the Netherlands.
Before the employee begins working for you, you must obtain all of his information and confirm his identity. Are you unable to correctly verify your employee’s identity? The anonymous rate must then be applied. Chapter 2 of the Handbook Payroll Taxes has more information on the anonymous rate.
Establish payroll management
Payroll setup and maintenance are required if you are hiring employees in the Netherlands. More details on this are available in Chapter 3 of the Handbook Payroll Taxes. You manage payroll administration wherever your company is headquartered or has an office. You are also in charge of salary determination. Additionally, you determine the premiums and taxes and make timely payments.
Wage tax brackets 2022-2023
The table below shows the amount of tax deducted from your salary for 2023 (for 2023, they are indicative based on the 2023 Tax Plan):
Up to AOW pension age (67 years)
| 2023 | 2024 | |
| Rate first bracket | 36.93% | 36,97% |
| of which income tax | 9.28% | 9,28% |
| of which national insurances | 27.65% | 27,65% |
| First disc length | €37,150 | €37,150 |
| Rate second bracket | 36.93% | 36,97% |
| of which income tax | 36.93% | 36,97% |
| Second disc length | €35,882 | €35,882 |
| Third bracket rate | 49,50% | 49,50% |
| of which income tax | 49,50% | 49,50% |
| Third disc length | remainder | remainder |
How much tax will I pay with a tax credit in 2022?
Fortunately, there are also several tax credits that reduce the amount of tax you have to pay. You can see which tax credits are automatically paid before you receive your income in the chart below. The Dutch government has not yet approved the rates for 2023, so we will update these rates once they are available:
| Type | Maximum amount | For whom? |
|---|---|---|
| General tax credit | €2,888 | For incomes up to € 21,317 (from € 21,317 to € 69,398 this decreases) |
| Labour tax credit | 4.541% x labour income | Labour income from € 0 to € 10,350 |
| (This credit will be abolished for the higher incomes as per 2023, and will be increased for the 2 lower tax brackets) | € 470 + 28,461% x (labour income – € 10,350) | Labour income from € 10,350 to € 22,356 |
| € 3.595 + 1,656% x (labour income – € 21.430) | Labour income from € 22,356 to € 36,649 | |
| € 4,260 – 5.86% x (labour income – € 36,649) | Labour income from € 34,954 to € 109,346 | |
| €0 | Labour income higher than € 109,346 | |
| Elderly discount | € 1.726 or (€ 1.726 – 15% x (collective income – € 38.464)) | Employees with AOW pension age |
| Young disabled discount | €771 | Everyone with a right to Wajong and works |
Labor Law stipulations to consider an Employer
As an employer in the Netherlands, you are subject to various responsibilities, such as payroll. The most important and distinctive duties of an employer are those owed to their employees. In the next two sections, we’ll go over some of your obligations as an employer, as well as the risks and issues that come with them. The responsibilities you have as an employer regarding the health and disease of your employees will be covered in this article.
Worker’s well-being
There are several guidelines for employers to follow to protect the health of their workers. According to the Working Conditions Act, you have a “duty of care” as an employer. This duty of care essentially means that you, as the employer, must make sure that employees can perform their tasks in a safe and healthy manner.
There are various obligations associated with this care requirement. Identifying potential risks in the performance of the activity and the necessary remedial actions is one of these duties. This is mentioned in a RI&E (Risk Inventory and Evaluation). Moreover, this endeavour is now considerably more important due to the corona pandemic. Another “additional obligation” you have as an employer is to be aware of applicable rules and regulations.
Risk Inventory and Evaluation (RI&E)
Every employer must regularly develop and/or amend a RI&E to ensure that employees can perform their duties as safely and healthily as possible.
Occupational illnesses and workplace accidents
Unfortunately, no amount of risk mapping can ensure that there won’t be any occupational accidents, even though the purpose of a RI&E is to identify the risks. Employers are obligated to notify the Labour Inspectorate right away if an accident or occupational sickness causes serious physical or mental harm or death. The Labour Inspectorate then determines whether to conduct a thorough investigation into the accident and its circumstances.
If an occupational disease arises, the occupational health and safety agency will inform the Netherlands Centre for Occupational Diseases of the situation. All accidents that cause employee absences due to illness must be documented by employers. This is covered by RI&E as well. There are more situations where registering an accident is necessary than reporting one. Registration is necessary even if there is no major damage.
Requirements in the event of illness
The responsibilities are frequently to prevent accidents and illnesses, but even when an employee is on sick leave, the company still has obligations. These obligations apply even if the absence was not caused by an occupational illness or an accident at work.
First, an employer is required to continue paying the employee’s salary in the event of illness (for whatever reason). Unless the worker knowingly contributed to their ailment.
In most cases in the Netherlands, the responsibility to continue including a staff member on the payroll or paying salaries during an illness lasts for two years. During the first year, you must continue to pay at least 70 per cent of the compensation; however, the wage cannot be less than the minimum wage. Is a higher percentage specified in the job contract or collective bargaining agreement? The increased proportion is then applied. Furthermore, you must pay the ill employee at least 70 per cent of their regular salary in the second year; however, if their regular pay is less than the minimum wage, you are no longer required to supplement their compensation.
Reintegration
You are partly responsible as an employer for the reintegration of a sick employee. This commitment is based on the best efforts. As soon as the employee reports for a sick leave of absence from work, this obligation is payable. An employee often returns to work two weeks after filing a sick report. You’ll notice that the first steps toward reintegration aren’t taken until the company determines that the employee has a condition that is more severe than a cold. The employee is also accountable for reintegration. The goal is to prevent the employee from becoming permanently unable to do his own job obligations, from becoming disabled at work and from eventually becoming eligible for the WIA, for example.
For more information about payroll in the Netherlands and the Dutch Labor Law, please contact us.
This guide is part of Relocate Staff to the Netherlands in our Launch Guide.
