People who live in the Netherlands are subject to various taxes. These must be paid on different types of incomes. Most persons are employed and need to pay the income tax. However, they are also subject to social security contributions. However, these levies are on both Dutch nationals and foreign citizens employed by local companies.
Below, our accountants explain the mechanism behind the social security tax in the Netherlands. You can rely on our local accounting firm for registration with the authorities in order to pay such contributions.
The main taxes levied on salaries of Dutch employees
People who work in the Netherlands do that in accordance with the Employment Law and employment contracts that contain provisions on their gross salaries from which various taxes are levied. In the Netherlands, salary taxes are withheld at source which implies that a worker will receive the net salary at the due date.
| Quick Facts | |
|---|---|
| Applicable legislation |
– Healthcare Insurance Act, – Pregnancy, Maternity, Paternity, and Parental Benefit Act, – Supplementary Benefits Act. |
|
Employment tax in the Netherlands |
– income tax, – payroll tax, – social security contributions. |
|
Dutch insurance schemes |
– the national insurance scheme, – the employee insurance scheme. |
| National insurance coverage | The national insurance scheme covers pension, long-term healthcare, child and survivor benefits. |
| Employee insurance scheme |
This insurance covers incapacity, unemployment, and sickness benefits. |
| Social security contribution types |
Social security contributions paid by employees, social security contributions paid by employers. |
| Social security payment frequency |
Monthly and is withheld from employees’ gross salaries. |
| Social security rates for employees |
– 17.09% for old-age social security, – 0.10% for survivor social security, – 9.95% for long-term care social security. |
| Social security rates for employers |
– 2.64% and 7.64% to the general unemployment scheme, – 6.18% (low premium) and 7.54% (high premium) to the occupational disability insurance scheme, – 0.50% as childcare allowance. |
| Types of contracts for the payment of social security |
– full-time and temporary work contracts, – flex work agreements. |
| Health insurance premium for self-employed people |
6.57%. |
| Social security payment agency |
Dutch Tax Authority. |
| Retirement age in the Netherlands |
67 starting in 2024. |
| Support in computing social security payments (YES/NO) |
Yes, our Dutch accounting firm can offer support in computing and making social security payments. |
| Payroll support (YES/NO) | Yes, we provide full payroll support in the Netherlands. |
Here are the main taxes that need to be paid in salaries by Dutch employees:
- the income tax, which is levied on the gross amount earned by a worker;
- the payroll tax which is imposed on both the employee and employer;
- the contribution to the unemployment fund;
- the insurance contribution to the national pension fund.
When it comes to the social security tax in the Netherlands, it must be paid by both employer and employee.
Our accountants in the Netherlands are at the service of companies hiring employees and that need to register as employers. This step is recommended to be performed alongside the tax registration procedure.
Special aspects to consider about the Dutch social security tax
The Netherlands offers specific benefits to foreign employees. As a matter of fact, both the employee and employer can obtain various tax advantages, such as the 30% ruling which can be presented in detail by our Dutch accountants.
When it comes to the social security tax in the Netherlands, it should be noted that an employee can obtain:
- various family benefits, such as maternity and paternity leave;
- sick leave and disability aid;
- care in case accidents;
- unemployment assistance.
What should be noted about the social security levy is that it does not include healthcare coverage. From this point of view, each person must choose and enroll with a service provider.
The same benefits apply to foreign citizens working in the Netherlands and they can claim various tax deductions, provided that they meet all the requirements imposed by the authorities.
Should you need advice in claiming such benefits, we recommend asking for guidance from our accounting firm in the Netherlands which can complete specific background checks to see if you are eligible.
Coverage of the social security tax in the Netherlands
The Dutch social security system covers the following:
- pension upon retirement;
- benefits for children;
- benefits for surviving spouses in the case of death of the contributor;
- long-term care.
Employment social security is a different component of the system, and it covers unemployment, disability and sick leave.
Each component is governed by a different authority. The social security is overseen by the Social Security Bank, while employment social security is supervised by the Institute for Employee Insurance.
Payroll taxes in the Netherlands
An important part of the social security tax in the Netherlands is associated with employment and the contributions employers and employees must make to this fund in order to be able to claim benefits in case of need.
Companies and their workers must pay the payroll tax which comprises the wage tax, the social security contribution, the premium for employer insurance, and the healthcare contributions.
The wage tax is included in the payroll tax and its rates depend on the income of the employee.
Employers must also contribute to the Dutch social security system, and they must pay for unemployment, occupational disability, and childcare allowance.
The rates at which these contributions are paid are the same, however, the amounts depend on the gross salary of employees.
Social security rates in the Netherlands
The rates of social security contributions in the Netherlands can slightly vary from year to year, just like the personal income tax. Here are the main contributions to consider:
- the wage tax is levied at rates ranging from 9% to 51% depending on the salary;
- employees are subject to social security contributions of 27.65% of their gross salaries;
- employers must pay unemployment premiums of 2.94% or 7.94% based on the duration of the contract;
- employers must also contribute with 8.55% for disability insurance and 5% for childcare.
For guidance on the social security tax in the Netherlands, please contact our accountants.