Payroll in the Netherlands

Mercans excels in providing top-notch payroll services in The Netherlands. Our commitment to delivering exceptional payroll solutions in The Netherlands is evident through our tailored services, utilizing the latest technology to meet the unique needs of employers of all sizes and types. With years of experience in the payroll industry, Mercans ensures accurate and compliant payroll services in The Netherlands, making us the go-to choice for businesses paying one employee or managing an entire workforce. Trust Mercans for paid accurately on time transactions and the convenience of multi-currency payments. As your local payroll provider in The Netherlands, we boast in-country payroll specialists with deep knowledge of local laws, offering comprehensive support for a seamless payroll experience tailored to your business needs.

Scope of Payroll Services in the Netherlands

In the context of providing payroll services in the Netherlands, Mercans offers a comprehensive set of tailored solutions designed to meet the unique needs of clients. This specific Standard Operating Procedure (SOP) should be reviewed in conjunction with the broader Service Definition and Payroll Services SOP to gain a holistic understanding of the services provided.

In-Scope:

Employee Master Data Maintenance
Processing Leave
Payroll Calculations
Payroll Journal Entry
Payroll Cycle Documentation
Payroll Reporting
Employee Self-Service (ESS)
Statutory Certificate Issuance
Employee Final Settlements
Employee Queries and Support Desk Services

Add-On:

Legal Entity Setup
Compliance Information
Annual Tax Filing Support
Advisory Services
Benefit Program Administration
Technology Integration
Training Sessions and Webinars

Payroll Solutions in the Netherlands

Uncover the potential of seamless payroll processing in the Netherlands with Mercans’ Global Payroll Solutions. Our flexible models ensure local compliance, support multi-currency transactions, and offer connectivity to global Human Capital Management (HCM) and Enterprise Resource Planning (ERP) systems. Paying correctly has never been more straightforward.

Explore Our Flexible Models:

  • SaaS (Software as a Service): Tailored for enterprise businesses managing multi-country payroll with intricate complexities arising from diverse data points, locations, currencies, and languages. Our SaaS model streamlines operations for optimal efficiency.
  • Managed Services: Designed for mid-sized and large enterprise businesses, our Managed Services model caters to those operating multi-country payroll. It provides on-demand HR expertise, ensuring security, reliability, and compliance across the board.
  • HRMS (Human Resource Management System): Perfect for mid to large businesses in expansion mode, our HRMS model offers a comprehensive range of functionalities, including payroll and benefits. Businesses can select the specific features they need, ensuring a tailored and efficient solution.

Experience payroll solutions that go beyond borders, tailored to the unique needs of your business in the Netherlands and beyond.

Elevating Payroll Excellence with Technology, Integrations, and Recognitions

Technology

Explore the forefront of innovation with Mercans’ cutting-edge technology that powers our global payroll solutions. Learn more about our technological prowess here

Integrations

Seamlessly integrate your Human Capital Management (HCM) systems with Mercans’ solutions, enhancing efficiency and connectivity. Discover the power of integration here.

Recognitions

Join a partner recognized for excellence. Mercans has earned accolades for its commitment to delivering exceptional payroll services. Explore our awards and recognitions here.

Things you need to know before running payroll in the Netherlands

Entity Setup in the Netherlands

Embarking on the journey of establishing your company in the Netherlands? Here’s a comprehensive guide to walk you through the essential steps for a smooth setup:

Look at your Visa Situation

Non-EU citizens must explore visa options like the DAFT visa, EU Blue Card, or HSM visa.
EU citizens moving to the Netherlands are automatically granted work permits.

Choose a Company Form

Understand the various company registration options, with a focus on the Dutch Limited Liability Company (B.V.).
Explore the benefits of a holding structure for legal, tax, and personal wealth advantages.

Find a Business Address

Your company must be registered at a physical office address in the Netherlands.
Explore the requirements for a valid office address and consider home address registration.
Ensure compliance with regulations regarding home address registration.

Gather All Documents Required for the Registration

As a non-Dutch individual, provide essential documents like a utility bill, TIN number, and passport copy.
Additional documents may be required if incorporating with an existing company.

Decide on the Nominal Share Capital of the B.V.

Understand the concept of nominal share capital and its implications for founders.
Learn how the minimum capital requirement was abolished in 2012, giving founders flexibility.
Consider factors like share value and share capital for optimal structuring.

Choose a Company Incorporation Specialist

Incorporating a BV in the Netherlands requires a Dutch notary, or you can opt for an online incorporation specialist.
Learn how an incorporation specialist streamlines the setup process.
Discover the advantages of incorporating 100% online.

VAT Number

Upon BV registration, the Dutch Tax Authorities will issue a VAT number.
Be prepared for potential additional questions during the process.
Involve an accountant for assistance with VAT-related inquiries.

Bank Account

Your BV must have a separate corporate bank account.
A Dutch bank account is not mandatory; foreign banks like Revolut, Wise.com, or N26 are viable options.
Ensure timely payment of the nominal share capital into the company’s bank account.

Other Things to Consider

Explore additional considerations based on your situation, including the Dutch 30% reduction on income tax, tax breaks offered by the Dutch taxation system, rules on minimum DGA salary for shareholding directors, and funding your company’s initial capital.

Registration of employees with statutory bodies

Navigating the statutory landscape is integral for businesses establishing themselves in the Netherlands. This involves a structured registration process with the Chamber of Commerce and the tax office, ensuring compliance with essential administration procedures.

For the registration of employees with statutory bodies, including Tax and Social Security authorities, the process is seamlessly integrated with periodical tax filings. Specifically, in Social Security:

  • Registration of New Hires and Leavers with the Social Security Authority occurs automatically from tax reporting.

Documents needed for the registration of new hires include:

  • Copy of employees ID (to be maintained in the payroll administration)
  • Form “Model Opgaaf gegevens voor de loonheffingen”

These forms are not required to be submitted but must be retained for reference and potential tax audits, either by the employer or, depending on the contract, the payroll provider.

Declaration to Statutory Bodies

Mercans’ team in the Netherlands ensures that social security contributions are deducted and paid to the authorities in accordance with local labor laws.

Declaration to Statutory Bodies:

Social Security:

Due Date for Contribution

One month after the conclusion of the payroll period.

Payment Options

Bank transfer, with the payment reference provided in the annual letter, encompassing reporting and payment deadlines, received by the employer.

Service Details

Service DescriptionFiling FrequencyPayment FrequencyDue DateProcess Definition
Monthly PaymentN/AMonthlyWithin a month after the end of the reporting periodStandard payment method involves online payment through bank transfer (SEPA).
Final Levy Working Cost ArrangementYearlyN/AIncluded in the tax reporting of the selected monthOptions: Client reports directly with Mercans providing data; Client reports non-payroll data (e.g., Christmas gifts to non-employees), which Mercans includes in the tax filing.
End Levy for Excessive Severance PackagesMonth/4-week period of terminationOne month after tax filingOne month after tax filingClient completes the 'Aangifte loonheffingen pseudo-eindheffing excessieve vertrekvergoeding' form for reporting.

Income Tax

  • Mercans ensures that income tax deductions are deducted from employee salaries and paid to the authorities on time.

Declaration to Tax Agency

Reporting and Payment Cycle

The wage tax and employee social security contributions are consolidated into one declaration and remitted within a month after the conclusion of the reporting period.

Responsibilities

While Mercans undertakes the preparation and delivery of declaration forms, the client is accountable for payments to the taxation authority.

Service Details

TaskClientMercansComments/Timetables to Respect
01 Prepare form End Levy for Excessive Severance PackagesXWithin 3 days of the 'payroll approval date' at the end of each period.
02 Send tax declaration onlineXAt the latest one month after the end of the period.

Statutory Filings

The table below provides an overview of statutory filings relevant to payroll, with details on filing frequency, deadlines, and purposes. Note that these filings are not within the standard scope but can be included upon client request as add-on services.

Statutory BodyFiling DescriptionFrequencyFiling DeadlinePurpose
BelastingdienstIncome tax and social securities combined period declarationEvery 4 weeks or monthlyOne month after the month end for monthly filings, and 4 weeks after the end of the 4-week period for 4-week filingsReporting of monthly tax and social security contributions
Pension funds (sectors)Monthly Uniform Pension Declaration (Uniforme Pensioenaangifte – UPA)Monthly10 days after month endReporting of pensions premiums due
Pension funds (company)Pension Plan Specific FormatMonthly10 days after month endReporting of pensions premiums due
Stichting PAWWOnline FilingEvery 4 weeks or monthlyOne month after month end for monthly filings, and 4 weeks after the end of the 4-week period for 4-week filingsScheme to extend unemployment benefits to 36 months
CBSStatistics ReportMonthlyOne month after the month-endStatistical data gathered by the government; Employers comply with data requests when government requests
BelastingdienstYear-end Income Tax Declaration (Form 5)AnnuallyDecember or February of the following yearReporting of certain taxes, e.g., final levy on excessive severance packages
UWV Employee Insurance AgencyMaternity & Sickness Leave ReportEvent-based4-2 weeks before the start of the leaveMaternity and sick leave pay reimbursement

Note: Add-On Service refers to whether Mercans includes this service as part of the client’s request. In-Scope denotes whether the statutory body is included in the standard scope of Mercans’ services.

Payroll Cycle in the Netherlands

In the Netherlands, payroll is processed on a monthly basis. Generally, compensation for work conducted from the first to the last day of the month is disbursed on the month’s final day.

Payroll Taxes in the Netherlands

Payroll taxes in the Netherlands comprise several components, including:

Wage Tax

  • Wage tax is deducted from wages as an advance levy of income tax.

National Insurance Contributions

These contributions support social security insurance schemes, covering residents and employees against financial consequences related to old age, death, exceptional medical expenses, and child-related costs.
The national insurance schemes include the General Old Age Pensions Act (AOW), Surviving Dependants Act (Anw), Long-Term Care Act (Wlz), and General Child Benefit Act (AKW).
Employers withhold these contributions and remit them to the Tax Administration, excluding the contribution for the General Child Benefit Act (AKW).

Employed Persons’ Insurance Contributions

These mandatory social security insurance schemes protect employees from financial consequences arising from illness, occupational disability, and unemployment.
The employed persons’ insurance schemes encompass the Sickness Benefits Act (ZW), Invalidity Insurance Act (WAO) / Work and Income according to Work Capacity Act (WIA), and Unemployment Insurance Act (WW).
Employers bear the full cost of these contributions.

Income-Dependent Contribution Pursuant to the Health Care Insurance Act (Zvw)

According to the Health Care Insurance Act (Zvw), employees contribute a nominal amount towards their health insurance, while employers pay an employer’s contribution to the Tax Administration.
In some cases, employees also contribute to the Health Care Insurance Act (Zvw).
The combined term for both contributions is the ‘income-dependent contribution pursuant to the Health Care Insurance Act (Zvw)’.

Payroll Records

Administering payroll taxes mandates meticulous record-keeping for accurate reporting to the Tax Administration. If you employ individuals, maintaining payroll records is obligatory, meeting specific conditions. While the location for record storage is generally your choice, voluntary withholding agents must store records in the Netherlands or offer access for inspections if stored elsewhere.

To assist in payroll record creation, essential information, like the ‘Payroll tax return letter,’ outlining tax return filing dates, is sent via post. For up-to-date wage statements, an annual statement is created before the initial wage payment each year, with automated records ensuring accessible data for generating complete wage statements.

Retaining copies of secondment certificates is recommended, particularly for employees seconded to the Netherlands. Payroll records, subject to audits, have specific administrative obligations and retention periods for certain schemes.

Issuing payslips is mandatory, especially for initial and varying payments. Digital provision is allowed with employee consent, and there is no prescribed payslip model.

Annual income statements, flexible in form and content, are obligatory post-year-end, even if not requested, with early issuance for departing employees. When terminating as a withholding agent, conditions include no employees and no wage payments in the Netherlands. Retention periods for documents extend specific durations post-employment termination.

Payroll Outsourcing in the Netherlands

Outsourcing payroll in the Netherlands provides various benefits. It efficiently delegates detailed payroll responsibilities to experts like Mercans, saving valuable time and allowing a focus on strategic business plans and enhanced customer service. With unparalleled accuracy, Mercans ensures flawless payroll processing, minimizing errors. Handling all reporting requirements, Mercans alleviates your team from repetitive administrative tasks. Their expertise guarantees seamless compliance with legal regulations, offering peace of mind in managing an international team.

Conclusion

In conclusion, entrusting your payroll needs to Mercans in the Netherlands means more than just efficient processing – it means gaining a strategic partner dedicated to accuracy, compliance, and freeing your team from administrative burdens. Our expert services ensure not only precise payroll management but also a focus on your core business objectives, providing peace of mind and allowing you to navigate the complexities of international workforce management seamlessly. Choose Mercans for a reliable and comprehensive payroll solution tailored to the unique requirements of the Dutch business landscape.

Frequently Asked Questions

What is 30% ruling?

The 30% ruling in the Netherlands is a tax advantage offered to expatriate employees hired from abroad. This ruling allows qualified foreign employees to receive 30% of their salary tax-free, making it an attractive incentive for skilled workers moving to the Netherlands.

To be eligible, certain conditions must be met:

  • Employment must be sourced from abroad.
  • The employee must possess specific expertise or skills that are scarce or not readily available in the Dutch labor market.
  • They should have lived outside the Netherlands at a distance of over 150 kilometers from the Dutch border for at least 16 of the 24 months preceding their employment in the Netherlands.
  • The employer and employee must jointly file an application for the 30% ruling with the Dutch tax authorities.

This ruling aims to attract highly skilled expatriates by offering them a tax advantage, often assisting in offsetting the expenses of migration and facilitating a smoother transition into the Dutch workforce.

What is Absenteeism insurance?

Absenteeism insurance, also known as disability insurance or income protection insurance, is a type of coverage designed to provide financial protection to individuals in the event they are unable to work due to illness, injury, or disability. This insurance helps replace a portion of the insured person’s income during the period of absence from work.

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