Guide to Dutch payroll
The right choice of payroll provider is essential to pay your staff accurately, on time and within the law.
The Belastingdienst (Dutch tax authorities) offer clear guidelines for the withholding and payment of income tax, social security contributions and income-related health insurance contributions, as well as the issuance of payslips, payroll records to be kept and the returns to be submitted. All of these requirements relate to payroll.
A simple payroll may have just one employee paid the same monthly salary, for example a shareholding director. A more complicated payroll may have a higher number of employees with fixed and variable payments and deductions, pension administration, a higher turnover rate, payrolls benefitting from the application of the 30% ruling and shadow payrolls.
Payroll systems – manual or automated
When it comes to choosing a payroll system, companies have three choices.
The Belastingdienst provides a prescribed model payslip which can be used by companies who do not wish to automate or outsource their payroll. This method of administration is however time intensive, does not support the online submission of wage tax returns and relies on in-house expertise in payroll administration and employment law.
Automating your payroll process provides greater control and ensures your system is automatically updated for any payroll changes but also requires specific in-house knowledge and experience to ensure the correct application. Taking these characteristics into consideration, many companies based within and outside The Netherlands decide to outsource their Dutch payroll to a specialist payroll provider
Outsourcing your Dutch Payroll
Payroll administration within the Dutch tax system can be complicated and multifaceted. Specialist payroll providers have valuable experience and knowledge of the workings of the Dutch tax system and the wage tax returns that must be submitted to the Belastingdienst. These returns and the associated payments for wage tax and social security contributions can be sent directly from the payroll provider’s payroll system to the tax authorities. Payroll providers can also assist with the application for a wage tax number and Dutch social security numbers for your employees, offer customised reporting, journals to transfer into your accounting system and targeted advice on how best to administer your payroll within the Dutch taxation regulations.
Choose your Dutch payroll provider carefully
How you decide to manage your payroll is an important choice. Mistakes and fines for late payment of wage tax returns can be costly. It is essential to find a solution that suits your business, whether it is in-house or outsourced. Payroll Works has compiled this guide to help you find your perfect payroll provider.