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Payroll services in The Netherlands

Payroll Services in The Netherlands

Updated on Friday 04th September 2015

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Payroll tax is different in every country and the Dutch market is no exception. The payroll tax in the Netherlands can be a time consuming and complex demand for an investor just opening a business but fortunately this is an area where outsourcing is not also possible but also very valuable. That is where Bridgewest steps in, offering through its experienced accountants the help companies need in this detailed area.

 

What are payroll taxes?

Payroll taxes are fees that companies must pay when giving their employees their salaries. There are two categories of payroll taxes: deductions from an employee’s wages and taxes paid by the employer based on the employee's wages.

The first category is named pay-as-you-earn tax (PAYE), or pay-as-you-go tax (PAYG). These are taxes that employers are required to withhold from employees' salaries, also known as withholding tax and they often cover payment in advance of social security contributions, income tax, and other insurances like unemployment and disability.

The second category is a fee that the employer must pay from his own funds and that is directly related to employing a worker. These taxes can either be proportionally linked to an employee's salary or they can consist of fixed charges. The charges paid by the employer usually cover social security and other insurance programs.

 

Payroll taxes in the Netherlands

Each investor or company that employs in the Netherlands automatically becomes a ‘resident taxpayer’ of the country, and every worker must be offered a contract in accordance to the Dutch payroll tax laws. The employer must administer payroll according to Dutch standards, meaning the company must be register at the Dutch Payroll Tax Office, and all monthly wages, taxes and social fees must be withheld and paid on time to the Tax Authority.

We are able to provide flexible payroll solutions in the Netherlands that improve payroll management for our clients, and saving their time and resource that can be used to improve business productivity. Thus, our customers can focus on the main activity of their business without concerning about the payroll service. 

 

Specific characteristics of the Dutch market

In the Netherlands, the companies may choose between a manual and an automated payroll system. The automatic payroll process has the advantages of total control and automatically update for payroll changes, but the usage of this procedure requires specific knowledge in this field. The manual payroll process requires more time and does not permit the submission of wage tax in the online option. 

Foreign companies with employees in the Netherlands must register for a fictitious residence in this country in order to pay taxes. The entrepreneurs must set up a payroll administration and must pay each month the wage tax and premiums for the social security funds or they may work under their foreign Ltd only with the tax authorities’ approval.  

There are three categories (boxes) of income:

  • Box 1: Income from profits, employment and home ownership.
  • Box 2: Income from substantial shareholding
  • Box 3: Taxable income from savings and investments.

For Box1, including the employment income, the following deductions will be levied:

  • -mortgage interest for primary residence
  • -the payment for certain life insurances
  • -funds for alimony
  • -medical expenses, other than usual, integrated in an additional category
  • -financial support for first degree relatives
  • -in certain conditions the moving allowance may be accepted
  • -certain tax credits for single parents, children and seniors, as provided by the law

All the persons working in Netherlands (residents and non-residence) must pay the social security contributions, calculated and retained from their gross salary.

How can we help you?

By choosing to outsource the payroll activity to our specialists, we guarantee the following services:

  • - Collecting and verifying the wage data
  • - Payroll services
  • - The delivery of pay slips and centralizers of wages and taxes
  • - Financial interface with the accounting system
  • - Interface with banking applications and payment of salaries
  • - Payment of fees and contributions in cash accounts
  • - Standard reports to management
  • - Legal reports, including the National Institute of Statistics
  • - Complex reporting in accordance with your company's needs
  • - Consultancy for your employees on the calculation of wages, taxes and contributions
  • - Self-Service - employees and management portal
  • - Help-desk services and legal information  
  • - Registration with the tax authorities
  • - Advice about the available tax free allowances
  • - Submission of wage tax returns

 

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