Dutch Employment legislation is one of the most complex in Europe, as it changes every 12 months. For non-Dutch or foreign companies, it can be extremely challenging to track and implement these changes.
In this guide we have included an overview of the Dutch tax system, including applicable tax rates for residents and non-residents, special expatriate tax regime and relocation allowances. The rules around rates and allowances change regularly and If an employer is found to be in breach of these regulations it can result in huge fines or retrospective deductions, so it is important to verify with the government or an international payroll specialist.
Dutch Income Tax
Special Expatriate Tax Regime; the 30% Ruling Explained
One great benefit for expats in The Netherlands, is the 30% tax exemption. For expats, in the current climate, the Netherlands offer certain tax incentives for those looking to bring their skill set to Holland. The 30% ruling allows highly skilled migrants to pay tax on only 70% of their gross salary, which is certainly an attractive factor, as for many, finance plays a large role when it comes to relocating.
What conditions are attached to the 30% ruling?
- There is a lack of expertise within their field in the Netherlands
- Minimum taxable salary at 70%: 37.743 euro
- For employees under 30 with a master’s degree: Minimum taxable salary at 70%: 28.690 euros
- The employee and employer have to agree in writing that the 30% ruling conditions have been met, which can be done through the employee contract
- The employer is registered in the Netherlands and the employee is a foreign worker
To find out more about the conditions attached to the Netherlands 30% tax regime, you can visit this helpful article by I Amsterdam.
How far must you live from the Netherlands to be granted the 30% ruling?
The 30%-facility is available solely for employees who have lived at a distance of more than 150 kilometres, in a straight line, from the Dutch boarder for more than 16 months in the 24-month period prior to their first working day in the Netherlands. Consequently, the 30%-facility is not available for employees from Belgium or Luxembourg, or for employees from Northern France, large parts of Germany and a small part of the United Kingdom.
Social Security in The Netherlands
Employers and employees in the Netherlands are required by law to pay social security contributions in the Netherlands. These contributions are deducted automatically at source. The level of employer contribution depends upon a variety of factors including contract type and company sector specification in the Netherlands (there are circa 100 different sectors and so classification is very important).
The Netherlands social security contributions fall into three main categories: Social Welfare Benefits, employee insurance benefits and general Insurance benefits.
They contribute to the below funds at varying percentages dependant on the Netherlands sector classification:
• Disability Insurance
• Pension Contribution
• Health Insurance
• Child Care
• Sickness Benefit
Dutch Health Care
It is important to make sure your employees and contractors are aware that it is a government requirement that all adults living or working in the Netherlands must have basic health insurance. If an employee does not acquire health insurance they will be at risk of a fine, which may lead to the government eventually taking payment for health insurance directly from their salary.
It is relatively easy for international workers to purchase health insurance in the Netherlands, as insurers have to offer a universal package for everyone over the age of 18 years, regardless of age or state of health – in most cases it’s illegal to refuse an application or impose special conditions, but not always.
In contrast to many other European systems, the Dutch government is responsible for the accessibility and quality of the healthcare system in the Netherlands, but not in charge of its management. Healthcare in the Netherlands is financed by a dual system that came into effect in January 2006. Long-term treatments, especially those that involve semi-permanent hospitalisation, and also disability costs such as wheelchairs, are covered by a state-controlled mandatory insurance.
For all regular (short-term) medical treatment, there is a system of obligatory health insurance, with private health insurance companies. These insurance companies are obliged to provide a package with a defined set of insured treatments. This insurance covers 41% of all health care expenses.
Premiums paid by the insured are, on average, €111 per month for basic health care (‘basisverzekering’) with variation of about 5% between the various competing insurers, and a mandatory deductible (‘eigen risico’) of €385 in 2018, 2019 and 2020.
International Payroll Partner
The Dutch Tax and Payroll process can often be complex for foreign businesses, so it is common for businesses to partner with Payroll Service companies like ourselves to manage the process on their behalf. Here at Leap29, our Dutch Payroll service is fully comprehensive and provides full guidance and management of how to employ people in the Netherlands:
Dutch Payroll Services include:
- Netherlands Payslip Calculator
- Registration with the Dutch tax office
- Registration with the UWV (Department of Social Security in the Netherlands) and obtaining
- BSN Number
- Creation and issuance of employing contracts in full compliance with the latest employment
- legislation in the Netherlands
- Application of the salary (monthly or 4 weekly) and creation of payslips
- Advice and application of possible tax allowances, to ensure the best possible NET retention
- Administration and Year End Statements
- Management of wage tax returns and forms for Social Security
- Personal Income Tax Returns
Simply drop us an email at firstname.lastname@example.org or call us on +31 20 890 8045