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Taxes on salaries in Netherlands

Taxes on salaries in Netherlands

The taxes on salaries in the Netherlands are considered direct taxes levied on the wages of employees or persons assimilated them. From the employee’s gross salary are withdraw certain taxes, categorized in payroll taxes and social contributions. Legally, these are two different types of taxes. The payroll tax represents common means of public funding, while the social contributions are intended to serve for the social insurance fund. The income tax is regulated by the Wet inkomstenbelasting 2001- the Dutch Income Tax.

Before the 1st of April each individual must report the income gained in the previous year in Netherlands. The income tax integrates certain fiscal duties: contribution for the basic old-age pension system (AOW), contribution for the pension system for partners of deceased people (ANW) and the contribution to the national insurance system for special medical care (AWBZ).

In Netherlands there is a progressive tax on wages, profits, social security benefits and pensions. The tax rate depends on certain criteria, for example the employee’s age, seniority, the wage amount.

For example, for incomes up to EUR 19,645 the tax rate is 5.85%, for incomes between EUR 19,645 and EUR 33,363 the tax rate is 10.85%, for incomes in amounts between EUR 33,363 and EUR 55,991 the tax rate is 42% and for incomes that exceed EUR 55,991 the taxes on salaries in Netherlands raise to a percent of 52%.

The taxes on salaries in Netherlands are a financial duty withdraw from employee’s wage on one side and paid by the employer on the other side. The taxes on salaries in Netherlands can be, in certain conditions, deducted from the salary of the employee and also from the employer’s behalf. The payroll tax is part of the so-called income tax. In addition, payroll taxes are levied on individuals who are treated as employees, and under the circumstances of the employment law.

Before each employee starts working, the company must register as an employer with the tax authorities. The company will then receive a tax number and the required forms, needed for paying taxes on salaries in Netherlands and also useful in further relations with the Dutch Tax Authorities.  

If you need to have a thorough understanding of what payroll in the Netherlands implies and how to handle it efficiently, you can ask our accountants about this service. Moreover, by using our solutions you will make sure that your employees are content and that you are operating within the law. We are at your disposal with both basic and advanced payroll solutions.

Apply here for further information on taxes on salaries in Netherlands, as well as for customized calculation according to the Dutch tax rates.