Blog
Hire contractors and employees with ease
HR
Create contracts in
a matter of minutes
Contracts
Issue and send invoices with
no limits. Manage them with ease
Invoicing
Take care of all accounting reports for your company
Accounting for SMEs
VAT-Related Tools
Take care of all VAT
problems with our tools
Blog
Register your trademark with ease
Trademark Registration
Start your company
with ease on Enty
Register a Company
Take care of overdue or one-time reports with Enty
Accounting Reports
I liked the idea of cooperating with friends, young company and I decided to move forward with you.
And I'm totally satisfied, honestly. You were doing follow-ups and helping me with everything all the time.
Meet our customer!
Let’s grow together!
Become a Partner
Explore useful articles and guides on managing your company
Blog
Samantha Asensi
Useful business glossary to help you
Glossary
Recommend Enty to your friends and receive bonuses from Enty
Invite a Friend
Find out what our
clients are doing
Enty Hub
Rewards
Explore discounts and offers from Enty’s partners

Hiring Employees in the Netherlands: Payroll Tax and Rules for Payment

Oct 10, 2022 · 5 min read

Don't miss new articles and discounts. Subscribe to our newsletter!
Employing your first staff is usually a business growth indicator but at the same time a burden of responsibility. To avoid delaying this decision, we propose to break this process down into manageable steps: compliance, tax deductions, payroll, and tax return.

This article emphasizes the employer’s responsibility to the Dutch tax authorities. The rules and numbers mentioned will be useful for you even if you delegate payroll stuff to some professionals because you will know the control points and the amount of work to be done. Let’s dive in!

Establishing Dutch Employer and Employee

When hiring for the first time you must register your company as an employer with the Dutch Tax and Customs Administration (Belastingdienst) and with the Netherlands Chamber of Commerce (KVK). You fill out a form and send it to authorities. They process the data and then you receive the following:

  • a payroll taxes number
  • a 'Payroll tax return letter'
  • a letter stating your sector of the economy and the percentage for the Return-to-Work fund (Whk, if you are required to pay employee insurance contributions) which depends on the sector

NB! Tax and Customs Administration classify you into a sector and send you a decision with the code of the sector within 8 weeks after your registration. Until you receive the decision, you should define the sector affiliation by yourself and use the percentage accordingly.
Next move to enter into an employment contract. Make sure that the following clauses appear there:

  • an employee’s salary
  • a mark whether a Collective Labour Agreement applies
  • working hours and rest times
  • holiday allowance
  • a mark whether you arrange an employee pension scheme
  • a type of employment contract (temporary or permanent).

Then you must collect some legal information from your future employee. Basically, there’s an official form, still, you can arrange the data in any other way, either in paper or electronic form.

Personal information is pretty standard: the employee's name and initials, date of birth, citizen service number (BSN), full address with postcode, and a request to apply for a payroll tax deduction. The document should be dated and signed by the employee.

You should verify the identity of your employee and keep a copy of the identity document. File the copy at the request of the Tax and Customs Administration.

NB! It is very important to send employees’ info to tax authorities before the first work day. Otherwise, an anonymous rate of wage tax/national insurance contributions is applied. And this is 52%!

Calculating Cost of Employment in the Netherlands

In the Netherlands, there are two general types of taxes related to employment - payroll tax and wage/income tax. Let’s start with the payroll tax, which is the social security premiums that you have to deduct for employees.
Social insurances secure an employee a temporary income during such cases as unemployment, illness, or incapacity for work, for example. Social security premiums are divided into employee insurance and national insurance.

Employee insurance is mandatory for every employee.

Employee insurance 2022

National insurances are compulsory for those employees who live or work permanently in the Netherlands. There are three brackets for wage tax/national insurance contributions. Employees who fall under the two highest brackets, i.e. their annual wage is more than € 35,472 pay wage tax only.

Employees whose annual wage is € 35,472 or lower pay both wage tax and national insurance as follows:

National insurance 2022

Employee’s and national insurance contributions and paid by employers on behalf of their employees to the Dutch Tax and Customs Administration. These contributions are part of the payroll tax. Now, let’s proceed to wage tax.
To put simply, a Dutch tax resident pays 37.1% wage tax up to an annual income of € 68.507. If her/his taxable income exceeds € 68.507 a year, s/he pays 49.50% wage tax.

Running Payroll and Filing Payroll Returns

When you pay a wage to an employee for the first time after employment, you are obliged to issue a payslip. There’s no official form, you can do it in any kind that is convenient for you - in digital form, for instance, if your employee agrees. Make sure that you include in the payslip the following data:

  • the gross wages in money
  • the compilation of the gross or net salary like the basic wage, performance-related pay, benefits, etc.
  • the amounts withheld from the wages, such as wage tax/national insurance contributions, etc.
  • the hours worked
  • wage period
  • the statutory minimum wage and holiday allowance
  • your name and the employee's name
  • type of the employment contract

Come from this data to calculate taxes and contributions and file a payroll return. Since the process is not simple, Dutch authorities recommend using accounting software or arranging for an intermediary like an accounting firm or an independent tax specialist.
In the Netherlands, a wage is paid once a month. It’s required to be done by the end of the month, but employers usually do it in 20es of the month. Payroll tax contributions are due by the end of the month of the following payroll. Finally, you have to file a payroll tax return during the same time period.

How to Make Payroll Easier

Accounting software, as mentioned above, is an option not to drown in the flow of figures and deadlines. But, although modern apps are user-friendly and specialized, you still need some basic skills in account to use them. And you need to allow time for it, and also take full responsibility for any mistakes.

Conventional accountants can remove this responsibility burden, but still communicating with them takes a lot of time. Imagine, the process is not set up, you cannot log in to the accounting application, and s/he is on vacation… Troubling, isn’t it?

The automated system of storing/ processing documents with human professional support is the solution that we create in Enty. A single Control Panel streamlines a paper flow, while a team of certified accountants and lawyers monitor and prepare documents on time, correctly, and completely.

Related Articles


Don't miss new articles and discounts. Subscribe to our newsletter!
We use cookies to provide the best
website experience. Explore notice.
We use cookies to provide the best website experience. Explore notice.
Subscription
Netherlands
One-Time Services
© 2020-2023 Entytech OÜ All rights reserved
Extra
+372 5911 1088
Contact Us
Explore
We accept
Developed with ❤️ by Entytech OÜ and Digirepresent Services OÜ (license № FIU000382)
14772172 Tornimäe tn 5, 10145, Tallinn, Harju maakond Register №16080939