Do you employ staff in the Netherlands? You have to deduct payroll tax from your employees' wages. You must pay these payroll taxes to the tax authorities. Payroll tax consists of:
- wage tax (wage withholding tax) and national insurance contributions (step 9 Loonbelasting/premie volksverzekeringen berekenen in the Payroll Taxes Handbook, pdf in Dutch)
- social security contributions
- an income-dependent employer's health care insurance contribution (see also step 8 Inkomensafhankelijke bijdrage Zvw berekenen in the Payroll Taxes Handbook, pdf in Dutch).
Register as an employer
Before you employ staff, you must register as an employer with the Dutch Tax and Customs Administration (Belastingdienst). Once you have registered, you will receive:
- a payroll tax number
- a payroll tax return letter
- if you required to pay employee insurance contributions you will also receive a letter stating the sector you are active in (the sector you are affiliated with determines the premium you have to pay) and a notice stating the percentage for the Return-to-work Fund (Werkhervattingskas, Whk).
You use the payroll tax number when you file your payroll taxes (in Dutch) and whenever else you contact the Tax and Customs Administration.
Registered office abroad?
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.
Paying less wage tax and national insurance contributions
In some cases you may apply a credit to some of your employees’ contributions and you do not have to pay the full amount of the wage tax deduction. 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 26 Afdrachtverminderingen of the Payroll Taxes Handbook (Handboek Loonheffingen, pdf, in Dutch).
Check your employee's identity
Upon employment, you ask your employee to provide 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. 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. Are you unable to properly establish the identity of your employee? Or does your employee not give his name, address, place of residence and social security number? Then you will have to apply the so-called anonymous rate (anoniementarief).
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. You can read more in Step 3 Loonadminstratie aanleggen of the Payroll Taxes Handbook (Handboek Loonheffingen, pdf, in Dutch).
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, Handboek Loonheffingen, pdf, in Dutch). You can file a request to do so if:
- you have filed the payroll tax return against which you want to set off the VAT refund 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 example, 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.
Payments to third parties (UBD)
Do you sometimes hire, for example, a speaker for a meeting or event, or someone who performs odd jobs for cash payment? And this person is not an entrepreneur or in your (fictitious) employment? Then you must report the amounts paid to third parties (uitbetaalde bedragen aan derden, UBD) to the Dutch Tax and Customs Administration.