Payroll Tax in the Netherlands: A Guide for Global Employers

Hiring employees abroad entails running a compliant payroll, which includes calculation of payroll tax for both the employee and employer. 

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Hiring employees abroad entails running a compliant payroll, which includes calculation of payroll tax for both the employee and employer.  In the Netherlands, there are many components to payroll tax, which may be different from your home country.  For example, in the US ‘payroll tax’ only refers to payments that support social security and post-retirement health coverage.

In the Netherlands, payroll tax covers a broader set of withholding and contributions, (including income tax withholding) and if you are new to employing in that EU-member country, you will want to have a full understanding of the terminology and rates.  This guide will get you started but it is likely you will need local resources to ensure it is done correctly.

Employer’s payroll obligations in the Netherlands

The employer’s primary responsibility is to withhold all employee payroll taxes and contributions in the monthly payroll.  This is no easy task considering all of the different insurance types, calculations and rates, as well as income caps.

What are the different types of payroll tax in the Netherlands?

There are four different areas covered by ‘payroll tax’, and you will notice that it encompasses almost every type of social contribution and taxation.

Wage Tax

The wage tax is the term for withholding employee income tax, but it is included under the ‘payroll tax’ terminology/calculation in the payslip. Income tax rates range from 9% to 51%.

Social Security Contributions

The total social contribution for employees is 27.65%, which is broken down into different types of benefits (17.9% old age social security, .1% dependent/spouse, and 9.65% for long term care)...read more

Shield GEO makes international employment simple. Our customers use Shield GEO to employ and payroll hundreds of workers in over fifty countries. Find out more.

Tim Burgess

Director, Shield GEO Services Ltd

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