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Mercans CountryIntel ® Netherlands Payroll And HR Insights

Mercans offers complete payroll, PEO and HR services in the Netherlands

One of the most open economies in the world, the Netherlands offers excellent infrastructure, a strong treaty network and a highly educated workforce. The OECD (Organisation for Economic Cooperation and Development) better life index indicates that the Netherlands has the best work-life balance.

Doing Business in the Netherlands

Ranked No.4 by Forbes “Best Countries for Business”, the Netherlands is well-situated and close to Europe’s 500 million consumers and business customers. With a competitive international business climate, the Netherlands offers foreign businesses a favorable environment to expand. Rolling out the orange carpet, the Netherlands Foreign Investment Agency provides free confidential services to support businesses starting up, rolling out or expanding in the Netherlands.The government also encourages innovative SMEs through a range of tax benefits, innovation loans and grants.

Entity Registration and Incorporation Requirements

Setting up a new business or expanding an existing one in the Netherlands is straightforward. Choose how your company operates from a range of entity types which suit your individual circumstance.

Banking

Banks are open from Monday to Friday 9 am to 5 pm.

Working Week

The standard working week is 38 hours per week usually worked from Monday to Friday

Labor Law

The main sources of employment law are the Dutch Constitution, civil law, labour regulations, collective labour law and collective labour agreements. The European Union plays a supplementing role due to binding legislation.

Main Industries

Chemicals, trade, machinery, metallurgy, electrical goods and services

GDP Growth

2.6%

Dates & Numbers

dd-mm-yyyy

Official State Name

Kingdom of the Netherlands

Population

17.44 million

Capital

Amsterdam

Major Languages

Dutch

Currency

Euro

Internet Domain

.nl

International Dialing Code

+31

Netherlands
Amsterdam, NL
1:01 am, January 26, 2022
3°C
overcast clouds

Payroll

Regulated by the Tax and Customs Administration, employers must pay employees at least once a month and must provide detailed payslips as well as adhere to the rules on deductions from pay. The majority of employees enjoy pay and conditions that stem from collective bargaining which are signed at the industry level. Companies who manage global payroll should take note that personnel costs are divided into four categories: direct labour costs (gross salary, holiday entitlements, bonuses commissions or profit distributions), indirect labour costs (pension fun, insurance, secondary benefits such as laptop or phone, meal or travel expenses and transport), payroll tax and other costs.

It is acceptable to provide employees with online pay slips

Payslip

Payroll Reports must be kept for seven years

Reports

20 days after the first full year of employment

Annual Leave

Two years and paid 70% of their wage level

Sick Leave

16 weeks of paid maternity leave and one week of paid paternity leave

Maternity & Paternity Leave

1 month

Employee Termination

Provisions for the 13th salary are customary and are given in November and December

13th Salary

£10.34 for a 38 hour workweek

Minimum Wage

Maximum of 12 hours per shift with a maximum of 60 hours in the working week.

Overtime

1/3 month's salary per year of service

Severance Pay

Tax and Social Security

Businesses in the Netherlands pay and withhold a few types of tax. Employers withhold salaries tax and social insurance contributions from employee salaries. And thanks to a number of tax conventions signed with a few countries, double taxation can be avoided.

Tax

To avoid employees having to pay a large amount of income tax, employers withhold salaries tax from salaries. Additionally, national insurance contributions, employee insurance contributions and income-related health insurance contributions are also deducted from employee salaries.

25%

Corporate Income Tax

49.5%

Personal Income Tax

21%

Sales Tax

21%

VAT

Social Security

Employers remit employee insurance contributions which pay for the unemployment benefit scheme (WW), the invalidity insurance scheme (WAO) and the work and income (capacity for work) scheme (WIA). Contribution levels are set for twice a year. Payroll employees are entitled to the basic pension scheme. The pension register indicates how much pension an individual accrues from an employer and how much state pension (AOW) they are entitled to.

51.24%

Social Security Rate

23.59%

Social Security Rate for Employers

27.6%

Social Security Rate for Employees

Employment Law

Anyone who works in the Netherlands is entitled to the Dutch minimum wage and a holiday allowance. This applies to temporary workers, flexible workers as well as foreign personnel.

Employment Agreement

The agreement must specify the employee’s salary, indicate whether a collective labour agreement applies, outline work hours and specify whether an employee pension scheme has been arranged. There are a few types of employment contracts including temporary and permanent ones.

Working condition

All employees aged between 21 and state pension age are entitled to the statutory minimum wage. The government can impose high fines on employers if this payment is not made. Employees are entitled to holiday days. The number of holiday hours that are taken depend on the number of hours worked.

Leaves

Different types of leave apply including care leave (taking time off work to care for someone close to you) which has an impact on salary. There is both long-term and short-term care leave

Employment termination

An employee can only be dismissed if there is good reason to do so and the law defines the permissible grounds for dismissal. However, there are situations where you cannot dismiss an employee at all and times where no grounds for dismissal are required. An employee, however, may resign without good reason.

1 month

Minimum notice period for terminating an employee

2 days

Total number of public holidays

36-40

Working hours per week

4 weeks

Total number of days for Compassionate & Bereavement Leave

Immigration

In general, non-EEA (European Economic Area) nationals require a combined residence and employment permit in order to be employed in the Netherlands for 90 days or more.

Residency Permit

European Economic Area (EEA) and Swiss nationals are entitled to stay in the Netherlands without a Dutch residence permit. A passport or ID card is sufficient proof of residence.
Entrepreneurs who intend to stay for longer than three months will usually need to apply for a provisional residence permit and a residence permit simultaneously. Those who are starting a business may apply for a one year residence permit as a starting entrepreneur.
Migrants who intend to work as an employee for over three months will typically require a GVVA (paid employment single permit) which is a combined permit to stay and work.

Work Permit validity

1 year

Required Documents

Valid passport

Proof of sponsorship and/or private accommodation

Documentary evidence that shows that the company you work for has sufficient financial means to do business in the Netherlands

Entry in the Commercial Register abroad

Proof of sufficient means to pay for business transactions and tenders

Copies of bank statements over the last six months indicating that you have sufficient means

Proof that tax has been  paid

Proof of travel medical insurance being taken

Documentary evidence indicating that you have a job in the country of origin or residence

Compliant, reliable, error-free and touchless payroll in Netherlands

Build the best team and hire top talent compliantly in Netherlands. Get in touch with Netherlands payroll outsourcing & PEO specialists for a free consultation!

This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
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