Penalties include outstanding holiday payments, salary entitlements during sickness, and pension dines by the Tax Authorities for not complying with the obligation to withhold income tax and national insurance contributions.

FUN FACT

The Netherlands has the highest number of part-time workers in the EU (4 out of 10 employees).

Taxes

Employer tax:

13.46% - 30.77%

National insurance premium - 12.86%

Employee insurance - 11.21%

Healthcare insurance - 6.7%

Employee tax:

20.5% - 48%

National insurance premium - 27.65%

Dutch health insurance - 5.45%

Income tax: The Netherlands has a progressive income tax varying from 9.42% to 49.5%


GROSS INCOME	PROGRESSIVE TAX RATE
Up to €35,409	9.42%
€35,410 - €69,308	37.07%
More than €69,399	Up to 49.5%

Netherlands Employment Cost Calculator

Use our handy calculator to understand the employment costs you have to consider in the Netherlands.

Provide us with some extra details and we will send you a full breakdown of the salary costs.

Employer of Record in The Netherlands

An Employer of Record is the legal employer of a worker in the Netherlands. As such, the Employer of Record takes care of all Dutch compliance aspects of employment, including payroll, taxes, statutory benefits, employment contracts and more.

the employer of Record is responsible for:

Ensuring their employment is compliant with local employment laws

Processing local payroll

Filing employment related taxes and returns

Issuing payslips to the employee

Distributing salary payments

How Employer of Record works

COMPANY

Maintains a direct relationship with the employee, allocates them work tasks, and manages their performance.

BOUNDLESS

Takes care of payroll, taxes, benefits, ensuring the employee and the company are compliant with all legal regulations.

EMPLOYEE

The third party to the agreement, the employee, fulfils all of their obligations as a worker for the company.

Statutory Benefits

Health insurance

All individuals living in the Netherlands have to participate in the health insurance scheme, regulated by the employee insurance agency.

Pension

All Dutch employees are entitled to an “adequate” pension arrangement.

Common Non-mandatory Benefits

Additional annual leave

Paid relocation service

Extended paternity leave

Commuter allowance or bike

Career development allowance

Private pension fund

Flexible & remote work

Dutch language courses

Meal allowance

Employee Rights and Protections

Employment contract signed by both the employer and the employee

Flexible and part-time working

Payslip

Equal opportunity and pay

Health and safety

Home office setup

Protection from sexual harassment

Whistleblower protection

Setup of a work council

Leave

Paid time off: 20 days + bank holidays

Paternity leave: five days

Sick leave: Unlimited

Parental leave: 26 weeks of which 9 weeks are paid

Maternity leave: 16 weeks, including 4-6 weeks before the baby is due.

Probation

The probation period in the Netherlands can be a maximum of two months for open-ended or 2-year contracts and one month for less than 2-year fixed-term contracts.

Payment Frequency

The payment frequency in the Netherlands varies and can be weekly, four-weekly, or monthly.

End of Employment

At-will employment termination is not a recognised concept in the Netherlands. Employment relationships can only end after prior approval from relevant employment offices. If the employment is ending by mutual agreement, it does not require authorisation.

To obtain permission to dismiss an employee, the employer will need to file a petition with the court or the Employee Insurance Agency (UWV), and prove they took the above actions and that the termination is still necessary.

For dismissals that either do not have the employee's consent, a dismissal permit from UWV or are in breach of a dismissal prohibition, employees may ask the court to annul it or to award a reasonable compensation. An employee is also entitled to appeal a UWV or court termination permit.

To put an employee on garden leave, both the employer and employee need to agree. Dismissed employees are entitled to any unused holiday, holiday allowance, pro-rate bonus payments (if applicable) and severance pay. Final salary payments for leavers need to be made on the next pay date at the latest.

Frequently Asked Questions

What are my options if I want to hire a worker in Netherlands?

While there are generally four ways of employing people across borders, not all are legal or sensible. Here is an overview of each way to employ a worker in The Netherlands, outlining the potential cons.

HQ country employment & payroll

While the person is in The Netherlands, they are employed and payrolled directly by the company’s HQ entity.

Cons: This may appear attractive, but it generally isn't legal in the long term. HQ payroll won't be possible if the person is not a tax resident in the HQ country.

Independent contractor agreements

People are locally registered as sole traders or limited liability company owners in The Nethrelands and invoice for their work. There is no direct employment relationship.

Cons: In The Netherlands, this is not a compliant or legal way to engage full-time workers who work solely for your company. There will be challenges in attracting and retaining talent.

Direct local employer setup

The company sets up as a fully-compliant local employer. This often involves setting up a local entity and local tax registration.

Cons: Expensive, time-consuming, high-level of complexity. Unknowns around how obligations and costs will evolve over time. There will be a need to stay on top of changes in regulations.

Partnering with an Employer of Record Netherlands /full-service Professional Employer Organisation

Employment is handled by a platform that specialises in employing people on behalf of customer companies. The Employer of Record helps to hire and pay employees.

Cons: For some countries, the ongoing costs may be higher than direct employment. Some education is needed to inform employees about how the employment relationship will work.

How long does it take to set up a company in Netherlands?

Setting up a local company in The Netherlands is relatively straightforward However, the difficult part comes after the initial setup when payroll needs to be calculated and run every month, taxes filed, benefits extended, change of rules and regulations followed. Here is an overview of everything you will find yourself needing to do.

Can I employ people as independent contractors in Netherlands?

While many employers practice employing remote workers as independent contractors, it's a bad practice. If an individual is giving their full and undivided attention to your company in Netherlands, treating them as an independent contractor is a likely breach of Dutch employment laws and of those in your country.

Your company could be liable for fines on owed holiday pay, sick pay, social welfare payments, paternity benefit, maternity benefit, or other legal measures. Since the individuals you are working with do not receive the benefit of local employment laws and protections that are often afforded to people working full-time hours.

What does HR compliance mean in The Netherlands, and why does it matter?

When you hire employees in The Netherlands, you have certain obligations as an employer. HR compliance is about ensuring your policies and procedures respect all applicable laws and regulations regarding employment and work practices. Complying with local employment law in The Netherlands is fundamental for the correct running of your business - not only because these laws are in place to protect employees and guarantee their rights are safeguarded, but to minimise your risk of liabilities as an employer. Being compliant means respecting and following all local labour laws, sick leave and illness benefits, annual leave, minimum wage, tax credits, working hours regulations and many other aspects of Dutch employment and tax law.

How much does it cost to employ someone in Netherlands?

As with every other country, there are certain costs associated with employing a worker in Netherlands that come on top of the gross salary you are offering. In Netherlands those are X, Y , Z. To view the exact percentages and amounts given the salary you are planning to offer, you can use our handy calculator tool.

What does Employer of Record mean in Netherlands?

It means that Boundless is the legal employer of the individual, as far as the Dutch government, tax, and employment authorities are concerned. We are responsible for:

informing you about any pre-employment requirements
ensuring their employment is compliant with Dutch employment law
informing you about the length of the maternity leave, paternity leave, public holidays, illness benefits, medical benefits
providing a locally compliant employment contract
processing local payroll
filing employment-related tax returns
issuing payslips to the employee
distributing salary payments
payments to the local tax authorities

Customers that work with an Employer of Record in The Netherlands are responsible for:

sourcing and recruiting their own workers
managing the employee’s day-to-day work load
contributing to the personal / professional development of the employee through their work
following any guidance we give on employment and HR best practices or legal obligations in The Netherlands, such as the employment contract, public holidays, annual leave, sick leave, maternity and paternity benefits, probationary periods, overtime pay, statutory redundancy payments, liability insurance and many others
ensuring that payroll bills relating to their team are paid to Boundless before the cut-off point in each pay cycle

Who is responsible for filing and paying employees' taxes and social insurance contributions in The Netherlands if employing through an Employer of Record?

Boundless as the Employer of Record Netherlands files all pertinent taxes and contributions to the employee insurance agency as they relate to the compliant employment of an individual in The Netherlands.

How does Boundless as an Employer of Record The Netherlands ensure HR compliance in Netherlands?

We carefully choose employment lawyers or advisories to partner with in each country we operate in, including The Netherlands. They ensure Dutch employment contracts, and any other relevant documents required for new employees comply with the local jurisdiction. We have thorough discussions on specific norms such as payroll services, social protection, data protection, notice period or work-from-home regulations. Whenever a potentially sensitive issue arises in The Netherlands, our internal team contacts the relevant firm to ensure all steps are taken to resolve it promptly.

What are the legal responsibilities of a company when they use an Employer of Record service like Boundless in Netherlands?

The company remains responsible and informs employees of the day-to-day management of the people and teams that are employed through Boundless, including any disciplinary or performance issues.

Boundless ensures compliance with Dutch-specific procedures, practices and labour laws while employing people and teams on behalf of the company.

Do employees get all their rights and benefits when employed through an Employer of Record in Netherlands?

Any new employee that is locally employed through an Employer of Record and has a compliant employment contract gets full employment rights and employee benefits as specified in Dutch employment law and employment regulations. They get a locally compliant employment contract, statutory maternity leave, annual leave, illness benefits, any relevant tax credit, and many more. All Dutch-based employees receive healthcare through the public healthcare system.

What taxes do I need to pay in Netherlands?

In Netherlands, both employers and employees have to pay taxes. For employers, these include National insurance premiums, employee insurance, and healthcare insurance and for employees, they include National insurance premium, Dutch health insurance, and income tax. To get a clear overview with both employee and employer taxes, use our salary breakdown calculator, submitting any additional data needed and get a downloadable pdf like this one.

Why choose Boundless as your employment partner in Netherlands

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Hire Employees in The Netherlands at a glance