My name is Laura Melzer-Boon and I am the payroll manager with Orange Tax Services. We provide Dutch payroll services to small and medium sized companies. My team and me are often asked the same questions, below I will address some of them.
Most frequently asked questions about Dutch payroll
What is holiday pay?
In the Netherlands we have besides the holidays an employee can take up, also holiday pay. Even though the name is almost similar, these two aspects of the salary administration is not the same. The holidays is obvious. The holiday pay is less obvious.
In the past Dutch employees had barely enough net salary to pay for the rent and groceries. The Dutch Government wanted to improve the living conditions and introduced an compulsory holiday pay benefit so the Dutch can actually go on holiday.
This benefit amounts to 8% over the salary earned in the previous 12 months and is paid in either May or June. The general rule is that this benefit is paid in May over the salary of June (previous year) up to and including May (this year).
Is this holiday pay compulsory? Yes it is, as it is part of our labour law. Can you decide not to pay holiday pay? Yes you can, but then you need to put in the employment agreement explicitly that the salary is including holiday pay. Then every month you see the holiday pay shown as being paid out.
Can you pay the holiday pay in another month than May or June? No, you cannot. In another month it is not regarded holiday pay, so the employer might think he has complied, but the employee can still successfully demand in addition holiday pay to be paid in May or June.
The holiday pay can be spend on anything, like a LED TV, washmachine, but also on an actual holiday. Maybe this explains why you see throughout the world Dutch travelling.
Is my salary high enough for the 30% ruling?
The 30% ruling we explained in another article. Part of the requirements is the minimum salary. Our law maker was not so clever in his communication with respect to the minimum salary requirement, but then again, maybe due to legal aspects he had no choice.
Hence the minimum salary in the Dutch payroll after the ruling has already been applied is mentioned in the legislation. If you earn a fiscal (!) salary of at least EUR 37.743 (2019) or when you are younger than and you hold a master degree, then the minimum fiscal salary is EUR 28.690 (2019).
But please understand these amounts are after the 30% ruling has already been applied. That implies this is already 70% of your gross salary. Hence the actual gross salary minimum is EUR 53.918 and EUR 40.985.
Then if you qualified for the lower salary and you do turn 30, you need to immediately that month qualify for the higher amount. As that hardly ever happens, you need to fear turning 30.
If you work for a Dutch University, no minimum income requirement applies.
Is pension compulsory?
That depends in what sector the employer is in. The tax office allocates an employer based on the core or actual work done in the company, in a sector. Some sectors like employees working in a shop, cleaners, metalworkers have compulsory collective labour agreements and those agreements have an compulsory pension contribution.
If you are not in such a sector, then you are not obliged to have a pension for your employees. If you do have a pension installed for your employees, all employees need to take part in this pension benefit.
Should you take out a pension insurance? If you have no Chambers of Commerce registration, you simply cannot take one out, as the first question on the application form is your KVK number. And yes, you can run a payroll without presence in the Netherlands.
If you can take out a pension, you should think twice if that is indeed in favor of the employees. Our system has become a dinosaur system that knows no flexibility. That implies you cannot switch pension insurance companies and take with you the buildup capital. You cannot leave the Netherland and take with you the buildup capital. If you somehow insist, then the tax is 52% plus 20% penalty tax, plus 25% penalty is a 97% tax rate. A so called show stopper. Most expats stay between 5 to 10 years in the Netherlands and then they leave, but the pension stays behind forever.
I worked less than 183 days in the Netherlands, can I claim back my tax?
No you cannot. The 183 day rule is in the tax treaties the Netherlands has with most countries. A tax treaty is an agreement between countries if there is a dispute over which country can tax what.
With employment in the Netherlands, even if you have a foreign company like a Ltd company and you work in the Netherlands, it is regarded domestic employment, hence no dispute, it is taxed in the Netherlands. If there is no discussion which country can tax what, the tax treaty is not applicable and then the 183 cannot be used. But even if the 183 day rule is called for, the three conditions are nearly never met. So if you worked in the Netherlands, you have paid your dues, but cannot claim all of it back.
We do recommend you to check with us after the calendar year has finished and you moved away, if you can have a refund via the migration income tax return.
If you have a Dutch payroll question we have not addressed above, feel free to contact me.