How payroll works in the Netherlands (2026)

Most Dutch employers pay monthly, typically at the end of the month or on the 25th. Weekly and four-weekly pay cycles exist in some sectors but are less common for office-based roles. The employer is required to provide a payslip (loonstrook) with each payment. The payslip must show gross salary, net salary, the applicable hourly minimum wage, and all deductions including wage tax, social security contributions, and pension premiums.

Since 2024, the Netherlands uses a statutory hourly minimum wage rather than a monthly minimum. For employees aged 21 and over, this is €14.71 per hour from 1 January 2026. The rate is adjusted every six months (1 January and 1 July). The monthly equivalent depends on the contractual working hours, which vary by sector. A 40-hour week translates to roughly €2,553 gross per month.

Dutch income tax on employment income (Box 1) uses progressive rates that include social security contributions in the lower bracket. For 2026, the structure is as follows. Income up to €38,883 is taxed at 35.70%. Income from €38,883 to €79,137 is taxed at 37.56%. Income above €79,137 is taxed at 49.50%.

The first bracket rate includes national insurance premiums (AOW, ANW, WLZ) totalling 27.65%. Above the social security contribution ceiling (approximately €66,956), the employee stops paying national insurance premiums, which is why the rate mechanics change at higher income levels.

Employees are also entitled to tax credits that reduce their liability, including the general tax credit (algemene heffingskorting) and the labour tax credit (arbeidskorting). The employer applies these credits through the payroll based on information from the Belastingdienst.

The General Unemployment Fund contribution uses differentiated rates to encourage permanent employment. Employers pay a lower premium for employees on permanent written contracts (2.74% in 2025) and a higher premium for those on flexible or temporary contracts (7.74% in 2025). This rate differential is one of the most important cost variables in Dutch payroll. Hiring on a permanent contract is meaningfully cheaper than hiring on a temporary one.

The disability fund contribution covers occupational disability and long-term incapacity. The Aof rate is differentiated by employer size. Small employers (below the premium threshold) pay a lower rate than large employers. The combined WIA/WAO rate is in the range of 6-8% depending on employer classification.

The WHK contribution funds return-to-work programmes for sick and disabled employees. The rate varies by company and is partly experience-rated, meaning employers with higher claims histories pay more. Rates typically fall between 0.38% and 6.08%.

Employers pay an income-dependent health insurance contribution (Zvw-bijdrage) of 6.10% on employee income up to a maximum of €79,409 (2026). This is separate from the employee’s own health insurance premium, which they pay directly to their insurer. Health insurance is mandatory in the Netherlands for all residents.

Employee insurance contributions (WW, WIA, WHK) are capped at a maximum contribution base of €79,409 for 2026. Income above this ceiling is not subject to employee insurance premiums, though it remains subject to wage tax at the higher bracket rates.

For a full breakdown of Dutch tax rates and contribution percentages, see the Boundless Netherlands tax guide.

The 30% ruling remains at the full 30% rate through 2026. From 1 January 2027, the rate reduces to 27% for all qualifying employees. The maximum duration is five years from the first working day in the Netherlands.

For 2026, the qualifying salary threshold is €48,013 gross annually (after the 30% deduction). For employees under 30 with a qualifying master’s degree, the reduced threshold is €36,497. The income cap (Balkenende norm/WNT standard) is €262,000. Salary above this amount does not benefit from the tax-free allowance. From 2026, this cap applies to all recipients, including those previously covered by transitional arrangements.

When the 30% ruling applies, the employer splits the salary into two components. 70% is taxable employment income. 30% is a tax-free extraterritorial allowance. The employee pays income tax and social security contributions only on the 70% portion. This can reduce the employee’s effective tax rate by several percentage points, making a meaningful difference to net pay.

The employer must apply to the Belastingdienst for the ruling. Processing typically takes 8-12 weeks, though the ruling can be applied retroactively once approved. An Employer of Record can handle this application on the employee’s behalf.

The 30% ruling has been subject to repeated political debate. The original flat 30% for the full period was first reduced in duration (from 10 years to 5 years), then a tapering system was proposed (30/20/10%), and then the tapering was largely reversed in favour of a flat reduction to 27% from 2027. Employers relying heavily on this facility should factor in the possibility of further changes in future tax plans.

Paying the salary is only part of the obligation. Employers must also actively support the employee’s return to work. This includes appointing a company doctor (bedrijfsarts), creating a reintegration plan (plan van aanpak) within eight weeks of the illness starting, and exploring modified duties or alternative roles. If the UWV determines that the employer has not met its reintegration obligations, it can extend the wage payment obligation beyond two years through a loonsanctie (wage sanction).

For a payroll perspective, the two-year sick pay obligation means employers need to budget for this contingency. The employee’s full compensation (including holiday allowance on the sick pay) continues to accrue during illness. The employer also continues to pay social security contributions during this period. Some employers take out insurance (verzuimverzekering) to cover part of this risk. When using an EOR, the EOR manages the sick leave process, but the cost still flows through to the employer.

What this means in practice. An employee earning €60,000 who falls ill for a full year costs the employer at least €42,000 in salary (70% of €60,000), plus holiday allowance on that amount (€3,360), plus continued social security contributions, plus the cost of the reintegration process. If the CLA requires 100% pay in the first year, the salary cost alone is €60,000. This is a serious exposure that distinguishes the Netherlands from most other EOR markets.