Payroll and Benefits Guide Netherlands
Last updated: May 02, 2023
Contributions
Employer
Employer Payroll Contributions
|
5.46% to 7.11% |
WAO/WIA Aof : Invalidity Insurance Fund 5.49% (small employers) to 7.11% (medium to large employers), applied on income up to 66,956 EUR annually. |
|
2.64% to 7.64% |
Unemployment Fund (lower: indefinite contracts, High: temporary contracts/on-call employees), applied on income up to 66,956 EUR annually. |
|
6.68% |
ZVW : Healthcare Insurance Act, applied on income up to 66,956 EUR annually. |
|
0.21 % to 3.36% |
WHK: Work Resumption Fund and Sickness Benefits Act applied on income up to 66,956 EUR annually. Applied percentage varies by sector, company size and sector. |
|
0.50% |
Child Care Premium, applied on income up to 66,956 EUR annually. |
|
Variable |
Pension (mandatory under certain setups only, such as EoR) |
|
8.00% |
Holiday allowance accrued on a monthly basis and paid to employees in May. |
|
23.49% to 33.29% |
Total Employment Cost |
Employee
Employee Income Tax
|
9.28% |
Up to 38,703 EUR |
|
36.93% |
38,703 EUR- 73,031 EUR |
|
49.50% |
Over 73,031 EUR |
Note: Special tax rates applies on one-time payments like bonuses, commissions and the annual holiday allowance. The taxation rate is based on the tables published by the Dutch Tax Authorities (DTA); the exact tax rate that will apply depends on the personal circumstances of the worker. The annual wage amount and special rate percentage will be indicated on the worker’s pay slip.
Employer taxes
Employee taxes
Minimum Wage
General
In the Netherlands, the minimum wage (wettelijk brutominimumloon) for employees 21 years and over is € 1,995 per month.
MINIMUM WAGE (PER MONTH)
Payroll
Payroll Cycle
In the Netherlands, the payroll frequency is monthly. Work between the first and last day of the month is typically paid on the last day of the month.
13th Salary
13th-month salary payments are customary in the Netherlands and should be paid in November or December of each year; this is stipulated in the employee’s employment contract or collective agreements.
Authority Payments
|
Authority Payment |
Paid To |
Due Date |
Method |
|
Belastingdienst Apeldoorn |
End of the following month |
Wire Transfer |
|
|
Hafkamp gerechtsdeurwaarders |
Employer Contribution and Income tax |
No recurring payment, therefore there isn’t any due date |
eCheck (Local) |
Working Hours
General
The standard working week in the Netherlands may be no longer than 45 hours. This is commonly 40 hours per week of 8 hours per day over 5 days.
Overtime
If work time limits are passed, overtime compensation is compulsory. The maximum number of overtime hours is per the employee’s collective agreement/employment contract.
Working Week
Monday-Friday
Leave
Paid Time Off
A full-time employee is entitled to 20 working days of paid annual leave per year. However, in the Netherlands, it is common practice to offer 25 or even 32 days of paid annual leave.
Also, any leave accrued from the previous year must be used by July, and the employer must inform the employee if this is about to expire (although this requirement is only for the statutory minimum number of days).
Public Holidays
Public holidays falling on weekends are lost. Public holidays are not necessarily a paid leave day, as this depends on the employer’s policy or collective labor agreement (CLA).
Sick Days
If an employee is unfit to work due to illness, the employer is obliged to pay at least 70% of their last earned wages plus holiday allowance up to a maximum of two years. Which concrete percentage applies depends on the content of the employment contract and/or CLA provisions. It is possible to pay a higher percentage of wage (normal in the Netherlands is first year 100%).
- The employer must pay 70% of the employee’s regular wages during the first year of illness (capped at 70% of the Dutch maximum premium wage) If this is less than the minimum wage, then a supplement is required up to the minimum wage amount, 1,995 Euros per month ( July 2023)
- During the second year of illness the employer must pay 70% of the employee’s regular wages. There is no need to supplement if the amount is less than the minimum wage.
It is common practice (and, as such, is set out in most CLAs) to pay 100 % of the full salary during the first year of illness and 70 % of the full salary during the second year.
Maternity Leave
A pregnant employee is entitled to 16 weeks of paid maternity leave; maternity leave consists of two periods: prenatal leave and postnatal leave.
- Prenatal leave: An employee must take 4-6 weeks of leave before the expected due date (zwangerschapsverlof).
- Postnatal leave: A employee must take the remaining 10-12 weeks (bevallingsverlof)) which starts from the date of the birth of the child.
Maternity pay is 100% of the worker’s daily wage based on the previous year’s average earnings, capped at 256.54 Euros per day. Employers will usually make the initial payment and reclaim it from the Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen, UWV).
In the event that pregnancy or childbirth results in incapacity for work, the employee is eligible for benefits equivalent to 100% of her salary for the maximum of a year after the date of birth.
PAID MATERNITY LEAVE (DAYS)
Paternity/Partner Leave
Partners are entitled to 1 week of ‘birth leave’, which must be taken within the first 4 weeks following the birth. This leave entitlement applies to both full time and part time workers and can be used in one block or spread over the 4 weeks.
Full pay must be given by the employer during ‘birth leave’.
Partners have the right to Extended Partner Leave of up to 5 weeks (25 days), to be taken within the 6 months following the birth. Leave can be taken in one block or spread over 6 months.
Extended Partner Leave is unpaid but workers might be eligible to claim up to 70% of pay from The Employment Insurance Agency (UWV).
Parental Leave
Parents are entitled to take time off for childcare for a maximum period of 26 x the length of their working week. The first 9 weeks must be used within the first year of the child’s life and are paid by The Employment Insurance Agency (UWV), up to 70% of their daily wage capped at 256.54 Euros per day.
The remaining 17 weeks are unpaid (unless stated otherwise in a Collective Labour Agreement or Employment Contract) and can be used until the child reaches the age of 8.
Adoption Leave
Parents who adopt or foster a child are entitled to up to 6 weeks leave; this leave can be taken in one block or spread out over the first 26 weeks since the child was brought home. Workers can apply for an adoption allowance during this period from The Employment Insurance Agency (UWV). At least 3 weeks notice must be given before taking this leave.
Care Leave
Workers are entitled to leave to take care of a sick relative:
- Emergency Leave of 1 day with payment is available for unexpected urgent reasons.
- Short-term Care Leave is available at up to twice the weekly working time (maximum of 2 weeks) to take care of a sick parent, child or partner if there is no one else but the worker able to provide this care. During this leave the employer continues to pay up to 70% salary.
- Long-term Care Leave is available at up to six times the weekly working time (maximum of 6 weeks) to take care of a seriously ill parent, child or partner. This leave is unpaid.
Termination
Termination Process
The termination process varies according to the Employment Agreement and Collective Agreement in place and on the type of contract and reason for termination. However, no termination due to economic reasons or long-term disability may take place without the Employee Insurance Agency (UWV).
Notice Period
The statutory minimum notice period for termination in the Netherlands is one month, however, it is dependent on the employee’s length of service as below:
Less than 5 years – 1 month notice
Between 5-10 years – 2 months’ notice
Between 10-15 years – 3 month’ notice
More than 15 years – 4 months’ notice
Severance Pay
Severance pay regulations are arranged by law, under what’s known as ‘transition payment’.
The statutory transition payment is due when the employment agreement has been terminated, and the amount is based on years of service: 1/3 of 1 month’s salary (including holiday allowance and, if any, fixed end-of-year bonus and/or average bonus of the last 3 years and/or commission of the last 12 months) for each calendar year that the employment agreement has lasted, and a pro rata amount for a period where the employment agreement has lasted less or longer than a calendar year.
The maximum transition payment for 2023 amounts to EUR 89,000 gross or, where an employee earns over EUR 89,000 per annum, a maximum of 1 year’s salary.
Probation Period
Probation or trial periods are generally set within the collective agreements and contracts of the employee; however, the standard practice is:
-
- Indefinite contracts can have a maximum of 2 months probation
- Temporary contracts under 6 months may not include a a probation period
- Temporary contracts of 6 months to 2 years can have a maximum of 1 month probation
- During the probation period, there is no notice period
VISA
VISA
There is no formal requirement for EU/EEA/Swiss nationals to obtain a residence or work permit. Still, they do need to obtain a residence permit to be eligible for social security benefits.
Nationals of the USA, Canada, Japan, Australia, New Zealand, and all non-EU/EEA/Swiss foreign nationals who wish to stay longer than three months in the Netherlands must obtain an “authorization temporary stay” (MVV) from the Dutch embassy or consulate in their home country before entering the Netherlands.
The employer must submit a work permit application to the Social Security Office (UWV), providing evidence that they have made every effort to recruit a Dutch/EU/EEA/Swiss national in the first instance. No applicant is allowed to work in the Netherlands until their work permit has been approved.
Remote Working
General
While it is not a legal right, employees may request to work (partly) from home under the Flexible Working Act, particularly if they have concerns regarding their health. As an employer, you must have valid reasons for rejecting such a request, such as scheduling conflicts or the inability to perform work duties elsewhere.
Additionally, specific conditions must be met for employees to work from home, including having at least 10 employees, being employed for a minimum of six months, and submitting a written request at least two months before the intended start date. To ensure safe and proper working conditions, health and safety regulations apply, and you should provide information and a suitable workspace for employees.
Work from home compensation is not required by law, but the employer can give employees who work from home an untaxed allowance of up to EUR 2.15 per day as of 2023 — even if employees work at home for part of the day.
However, there is an important exception to this. Employers may only provide one of the two allowances: either the tax-free work-from-home allowance, or the mileage allowance of EUR 0.19 per kilometer. The employee cannot have both allowances at the same time.
VAT
General
The standard rate of VAT in The Netherlands is 21.00%.
For companies looking to hire in the Netherlands without a local entity, see our full payroll service in the Netherlands.
Stay up to date on payroll & employment law changes
Version History
Payroll contributions and personal income tax rates have been updated.
New paternity leave in effect from August 2022.
Minimum wage: The minimum monthly wage rose to €1,684.80 per month for any employee over the age of 21.
Employer Payroll Tax: Unemployment Insurance dropped to 2.70% - 7.70%
Employer Payroll Tax: Health insurance rose to 7.03%
Questions & Answers
See how Papaya can help you automate your global payroll or EoR whilst staying 100% compliant with local labor laws
Payroll and Benefits Guide
in Netherlands
What’s covered in this guide:
- Employer/employee contributions
- Minimum wage
- Working hours
- Visa requirements
And more...
Public Holidays Calendar
| Day | Date | Holiday | Notes |
|---|---|---|---|
| Sunday | Jan-1 | New Year's Day | |
| Monday | Apr-10 | Easter Monday | |
| Thursday | Apr-27 | Kings Day | |
| Thursday | May-18 | Ascension Day | |
| Sunday | May-29 | Whit Monday | |
| Monday | Dec-25 | Christmas | |
| Tuesday | Dec-26 | Second Day of Christmas |
How do i apply for a 30% tax ruling?
Employees who are eligible must jointly apply with their employer for this with the local tax authorities -> https://www.belastingdienst.nl/wps/wcm/connect/bldcontenten/themaoverstijgend/applications_and_forms/application-income-tax-and-national-insurance-30-facility-2021
Once approved, it is applied to the salary and can last up to 5 years.
When should i receive holiday pay?
Every month your employer is obligated to put 8% of your gross salary aside. This amount is then paid out every year in May. If your employment is terminated, this is paid out to you upon termination.
will you be able to provide offer letters to employees and process payroll for us if we are not incorporated in Netherlands?
Hi Helen, thank you for reaching out to us! If you are not incorporated in the Netherlands, we can most certainly assist you! Kindly book a demo here https://papayaglobal.com/schedule-a-demo/ and someone will reach out to you so we can understand exactly what you need.
I wanted to know when should I receive all the remaining value the company have to pay me after the end of my notice period.
I quit my job and they haven’t even said anything regarding the vacation days or the rest of the salary.
Hi Weslley, thank you for your question. Can you please clarify? Did you quit before the end of the notice period? Regardless, you should receive your final pay including unused vacation days on the regular pay date.
Hi, under the 30% tax ruling are the Employee Payroll Contributions calculated on the gross 100% of the salary or on the 70%? Thx.
Hi Ludovico, thank you for your question. The 30% tax ruling only applies to the employee side of what needs to be deducted (the employee is exempt from paying taxes on 30% of their salary when eligible). The employer payroll calculation is based on 100% of the salary.
Hi there, if i receive per month the minimum wage (1725euros) how much of tax should i be discounted?
It depends on several factors, but total employee tax is between 27.65% to 30.35%.
Hi,
I want to know if Holiday allowance is included in my eligible earnings for annual bonus calculation. Is there an official document which states anything about this.
Your employment contract or collective labor agreement contains agreements about holiday pay, and your pay slip shows how much you will receive. Your holiday pay is calculated based on your wages from the previous year (for example, from May to May). Profit distributions and year-end bonuses do not count towards your holiday pay. You can find out more here – https://www.rijksoverheid.nl/onderwerpen/vakantiedagen-en-vakantiegeld/vraag-en-antwoord/hoe-hoog-is-mijn-vakantiegeld
How to clculate Internet allowance in Netherlands
The employer can decide how much they wish to give as a fixed monthly allowance towards internet.
It means Internet Allowance is Input = Output, Correct?
If an employee is paid 35k (gross) per year. How much of the taxable amount is paid by the employee and how much by the employer.
Hello, I would recommend using our Cost Calculator which breaks down salaries to employer’s and employee’s contributions and net amount.