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If you employ staff in the Netherlands, you are obliged to deduct payroll tax from your employees' wages. Payroll tax consists of:
- wage tax (wage withholding tax)
- social security contributions (employee and national insurance contributions)
- an income-dependent employer's health care insurance contribution (Health Care Insurance Act contribution).
Register as an employer
Before you employ staff, you must register as an employer with the Dutch Tax and Customs Administration (Belastingdienst). Is your company’s registered office in another country? In some cases, you still have to deduct payroll taxes. In these cases, you must also first register with the Tax and Customs Administration. Once you have registered, you will receive a payroll tax number and the forms you require.
Paying less wage tax and national insurance contributions
Sometimes you may apply a credit to some of your employees’ contributions. With a credit you pay less wage tax and national insurance contributions. For example, if your employee carries out research and development work, you may be eligible for the WBSO R&D tax credit. Read more about tax credits in step 27 Afdrachtverminderingen of the Payroll Taxes Handbook (pdf, in Dutch).
Check your employee's identity
Your employee provides you with a signed statement that includes data such as name, address, date of birth and citizen service number (burgerservicenummer, BSN). You verify and record each employee’s identity. If verification of the employee’s identity is not, or not completely, possible, you will have to apply the so-called anonymous rate (anoniementarief). In the case of a foreign worker, you must also check whether they are permitted to work in the Netherlands. Make sure you have all the necessary information before they start working for you.
Keep payroll records
You must keep your employees' data, such as their employment contract, in your personnel records. You use part of this data for your payroll records. You determine the elements of the employee’s wage, calculate the correct contributions and taxes, file a tax return and pay what you owe by the due date. For this, you may want to use payroll software or hire a payroll office, accountant or financial advisor.
In the Payroll Taxes Handbook (pdf, in Dutch), issued by the Dutch Tax and Customs Administration, you can read everything you need to know about payroll tax. For instance, the handbook contains payroll tax and national insurance rates tables as well as a guide on how to calculate payroll tax (pdf, step 9 Loonbelasting/premie volksverzekeringen berekenen).
Set off VAT payment against payroll tax declaration
Under specific conditions it is possible to set off a VAT payment against a payroll tax declaration (step 13.4.3 Loonheffingen verrekenen met teruggaaf btw Payroll Taxes Handbook, pdf, in Dutch). You can file a request to do so if:
- you file your VAT and payroll tax returns on time;
- you file your VAT and payroll tax returns in the same period;
- you have no outstanding tax debts;
- you file your request for offsetting VAT at the latest on the last date that you would be able to file your payroll tax returns.
Use the Dutch-language form Request setting off VAT refund against payroll tax (Loonheffingen verrekening met teruggaaf btw).
Work-related costs scheme: staff allowances
With the work-related costs scheme (werkkostenregeling, WKR) you can reimburse certain expenses, provide benefits in kind or make provisions for your employees without tax liability. The work-related costs scheme applies to, for instance, travel costs.
Payroll tax temporary staff or subcontracted work
Do you hire temporary staff through an intermediary or subcontract work to a contractor/subcontractor? The intermediary or contractor/subcontractor must pay the payroll tax for these staff. If they fail to do so, the Dutch Tax and Customs Administration may hold you liable.
You pay various premiums for employee and national insurance contributions: for unemployment, occupational disability and sickness. You also pay a sector fund premium: a contribution towards unemployment costs in the sector you are affiliated with. You can use the payroll tax number when you file your payroll taxes and whenever else you contact the Tax and Customs Administration.
When you register with the Dutch Tax and Customs Administration as a starting employer, they determine the sector to which you belong within 8 weeks. However, you can appeal against this decision. The sector you are affiliated with determines the premium you have to pay.