Payroll in the Netherlands for foreign employers

When a foreign employer has Dutch payroll obligations

Dutch payroll taxes have four parts: wage tax, national insurance contributions, employee insurance contributions and the income-related Zvw contribution for health care. Which parts apply depends on two separate questions: are you a withholding agent, and is your employee socially insured in the Netherlands?

• You are a withholding agent for wage tax and national insurance contributions if you have a fixed establishment or a permanent representative in the Netherlands
• You are also a withholding agent if you place staff at the disposal of a business in the Netherlands, for example by hiring out or seconding them
• Without a fixed establishment you are not obliged to withhold wage tax. You can choose to: you then keep a Dutch payroll administration and register with the Dutch tax authorities. You withhold both wage tax and national insurance contributions, not only one of them
• Employee insurance contributions and the Zvw follow a different rule. If your employee is socially insured in the Netherlands, you pay them, with or without a fixed establishment

An employee who lives and works in the Netherlands pays Dutch tax on the salary. For an employee who lives abroad, the tax treaty decides. Under most treaties the Netherlands may tax work done here if the employee is here for more than 183 days in the period the treaty sets, if the salary is paid by an employer in the Netherlands, or if it is borne by a fixed establishment here.

Social security: which country applies

Within the EU, the EEA and Switzerland, Regulation (EC) 883/2004 decides where your employee is insured. The main rule is the country where the employee works. An employee who works only in the Netherlands is insured here, even if the employer is established abroad.

An employee posted to the Netherlands for up to 24 months can stay insured in the home country, with an A1 certificate from that country. You then pay no Dutch social security contributions for that employee, but Dutch wage tax can still apply. For countries outside the EU, a social security treaty or Dutch law decides.

Registration as an employer

• A foreign employer registers with the Registration form Foreign companies, the same form used for VAT. It is printed, signed and sent by post to the Dutch tax authorities in Heerlen
• You receive a payroll tax number and a filing letter that lists your return periods. According to the Dutch tax authorities both usually arrive within a week. The filing letter is sent again every November
• If your employees are insured for employee insurance, you also receive a letter with your sector and one with the premium percentage for the Return to Work Fund (Whk)

A foreign company uses the same form to register for VAT; see VAT registration in the Netherlands for foreign companies.

Not sure whether to run your own payroll or outsource the employment? Read employer of record or your own Dutch payroll.

Every month and every year

• Before the first salary: the employee's identity and Dutch citizen service number (BSN)
• A payroll tax return every month or every four weeks. Return and payment are both due within one month after the end of the period
• A payslip for each salary payment (Article 7:626 of the Dutch Civil Code)
• After the end of the year: an annual statement for each employee, with the gross wage and the tax and contributions withheld

The 30% ruling

If you withhold Dutch wage tax, you can apply the 30% ruling to employees recruited from abroad, if they meet the conditions. A foreign employer without a fixed establishment can do so by choosing to withhold. The ruling is then applied in the payroll every month.

For your employee: what applies to the tax return for the year of the move is explained on our page on the M form.

Posting workers from the EU: the WagwEU notification

An employer from another EU country, the EEA or Switzerland that sends employees to the Netherlands for a temporary assignment reports the assignment and the employees in the online portal of postedworkers.nl before they arrive. Some sectors and certain temporary activities are exempt. The Dutch client checks the notification, and the Netherlands Labour Authority can fine a missing notification. Posted workers are entitled to the core Dutch terms of employment, such as the minimum wage.

The notification is separate from the payroll tax registration. We tell you whether it applies, and keep the payroll in line with it.

Example

A software company from Germany, with no office in the Netherlands, hires two employees who live and work in Utrecht.

• Both work only in the Netherlands, so under the EU regulation they are insured here. The company pays Dutch employee insurance contributions and the Zvw, although it has no fixed establishment
• The company also chooses to withhold Dutch wage tax and national insurance contributions, so the employees do not pay these through their own income tax return
• Our fees: € 195 once for the registration, then 2 x € 25 = € 50 per month, excl. VAT

This is a worked example, not a client case.

What we do

We register you as an employer with the Dutch tax authorities, set up the Dutch payroll and run it ourselves every month: payslips, the payroll tax return, the amounts to pay and, after the year end, the annual statements. Per employee we tell you which payroll taxes apply, including when an A1 certificate means no Dutch contributions are due. You pay the salaries and the payroll taxes from your own account, and you remain the employer: we do not act as an employer of record. Registration: € 195 once. Payroll: € 25 per employee per month, excl. VAT.