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.
Below, our Dutch accountants present the main payroll services we can provide for you in this country.
What are payroll taxes?
The following payroll taxes
must be considered in the Netherlands
- the wage levy;
- the social security contributions;
- the employer insurance premium;
- the income-dependent employer's health care insurance contribution (where applicable).
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.
You can read about our payroll services in the Netherlands in the infographic below:
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, 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.
- 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?
- 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.
Tailored payroll assistance in the Netherlands
Starting a business in the Netherlands
is quite simple and easy in terms of registration, however, when it comes to hiring employees there are several procedures that must be completed. Among these, we mention the following:
the registration of the company as an employer with the Tax Authority in the Netherlands;
the registration of employees with the same authorities, plus their registration for social contribution and pension benefits;
the creation of the HR department or direct outsourcing of this department with an accounting firm in the Netherlands;
the setup of the payroll which implies registering each employee with the company’s own system.
Our accountants in the Netherlands
can offer tailored payroll services
which start directly with the registration of the company and employees with all relevant authorities.
Registering as an employer in the Netherlands
A Dutch company is required to register with the Tax and Customs Administration
when it hires its first employee. It should be noted that there are different forms that must be filled for local and foreign companies operating in the Netherlands. The registration as an employer is usually completed with the local tax office in the city the company is registered in.
Based on the information filed with the tax office, the company will receive:
- its payroll tax number;
- the payroll tax return letter in which the tax return periods are provided;
- information about the sector in which the company must pay the insurance contributions;
- information about the percentage to be directed to the Return to Work Fund.
Our accounting firm in the Netherlands
can handle the registration for payroll for your company. We can also assist foreign companies seeking to establish operations here with dedicated accounting services
, including payroll setup
Registering employees for payroll in the Netherlands
Once the first step of registering the company as an employer
is completed, our Dutch accountants
can handle the registration of all employees with the tax authorities. This procedure can be quite strenuous for companies with large numbers of workers, which is why it best left with a professional accounting firm
The registration of employees for payroll in the Netherlands implies:
There are 19 offices with which employees can be registered for payroll in the Netherlands and our accountants can provide more information on this matter.
As documents that can be used for registering a person as a Dutch employee, the tax authorities will only accept the ID, the valid passport, the residence permit (the residence sticker on the passport).
Payroll maintenance in the Netherlands
Our accounting firm in the Netherlands will handle the payroll maintenance of your company which implies keeping data on employees and their work contracts. Based on this information, our accountants will calculate the monthly wages, the taxes that need to be withheld, the contributions that must be directed to the relevant authorities, the filing of the tax returns in due time.
Our accountants use dedicated payroll software in order to maintain all information in order and easy to access. Moreover, all payroll services are guaranteed to be provided in accordance with the requirements of the legislation.
Taxation of employees in the Netherlands
The Netherlands levies the personal income tax at progressive rates which rely on the Box taxation system. Based on this system, the amount to be withheld is calculated by the tax authorities here.
Here are the main aspects to consider when dealing with the taxation
of employees in the Netherlands:
- the lowest income tax rate paid in the Netherlands is currently set at 18.75%;
- the highest tax rate imposed in individuals is set at 51.75%;
- social security contributions represent 27.65% of an employee’s wage;
- the employer is also required to pay a general unemployment insurance of 3.60%.
One of the advantages offered by the Netherlands is the 30% ruling which implies a tax exemption for foreign employees working in Dutch
HR solutions for companies in the Netherlands
Before setting up the payroll
, a Dutch company
must hire employees. In order to do that, it must comply with the Employment Law in order to make sure all work contracts are correct and are registered with the relevant authorities. Even if this is a job for the Human Resources (HR) department, it can be handled by our accountants in the Netherlands
who can verify and make sure all employment contracts and additional documents are in order.
Our payroll services in the Netherlands include among others:
- preparation and registration of new employment contracts, as well as amendments to existing ones;
- submitting monthly and annual tax forms related to employees and employers;
- wage transfer to Dutch employees’ accounts;
- drafting and registration of annual leave documentation and subsequent payments;
- preparation of specific employment documentation related foreign workers;
- income tax and social security withholdings and deductions.
If you have questions related to our HR solutions, do not hesitate to reach out to our Dutch accountants for more information.
Payroll services for small businesses in the Netherlands
Small companies have specific needs and need to make sure they work as effectively as possible. This is one of the most important reasons small business owners in the Netherlands hire specialists to handle specific aspects related to employment and payroll which provide them with solutions that have been used before and that work.
Our accounting firm in the Netherlands
can provide tailored payroll services
to small companies
that need to benefit from quick and effective solutions that do not cost them as much as it would cost to create an entire department.
We can set up and administer the payroll in a small business in order to help their employees and manager to focus on their tasks and grow their companies. These solutions also work for Dutch startup businesses that need to pay attention to other aspects of their operations rather than on employment matters.
Our Dutch accounting firm will provide case-to-case assistance to small businesses and startups in order to help them achieve their targets instead of dealing with administrative issues.
Setting up the payroll for Dutch medium and large-sized companies
When it comes to medium and large-sized companies
, the number of employees is higher and so will their accounting needs. With a vast experience and presence on the Dutch market for years now, our accountants and auditors have the necessary skills to set up and administer the payroll
of such businesses.
If you need specific solutions for an effective payroll, do not hesitate to rely on our services.
Record keeping services in the Netherlands
All Dutch companies
with at least one employee are bound by law to keep various records on the respective owner. However, in the Netherlands having one employee is seldom the case, which is why for businesses with a large number of workers we can provide record keeping and updating services.
Dutch business owners must know that they are required to maintain yearly wage statements or payslips for up to 7 years, according to the law. These documents must contain information about each employee, their gross salaries, their net income and all modifications brought to their wages in time. These must be kept in a digital format at our office while the client has access to them all the time.
Our accountants in the Netherlands can maintain and update employee records in a timely manner for employers to not be subject to any penalties imposed by the authorities.
Specific payroll services for Dutch companies with foreign employees
The Netherlands relies on an important share of foreign workforce, as local companies can hire specialists for some departments. This is one of the reasons, the government has created the 30% tax ruling which enables foreign employees benefit from special treatment from a taxation point of view. Specifically, the employer can pay 30% of their salaries as tax-free allowances. However, this will require special documentation to prove the employee and employer can qualify for this ruling.
Our Dutch accountants can help with the preparation and filing of documentation in order for foreign employees to obtain all their benefits related to working in this country.
Apart from these, Dutch companies with employees abroad must also inform the local tax authorities about their workers which is another aspect our accounting firm can help with, so if you have foreign or transferred employees, do not hesitate to ask for guidance related to their payroll.
Do not hesitate to contact us
if you need payroll services in the Netherlands