Netherlands Hiring Employees Guide

Payroll Tax (Loonheffing)

• Loonheffing components: Payroll tax (loonheffing) is a combined tax withheld from the employee's gross salary. It consists of: income tax withholding (loonbelasting) — the employee's share of box 1 income tax collected at source via the payroll system; social security contributions (volksverzekeringen) — AOW (state pension), ANW (survivor benefits), and WLZ (long-term care), collectively known as the volksverzekeringen, with a combined rate of approximately 27.65% on the first ~€38,441 of income (2026); and employee insurance contributions (werknemersverzekeringen) — WW (unemployment), WIA (disability), and ZVW (healthcare) contributions. The employer also pays employer premiums for these schemes.
• Payroll registration (loonheffingennummer): Every employer must register for a loonheffingennummer (payroll tax number) with the Belastingdienst. This is obtained when registering the business — the KvK notifies the Belastingdienst automatically. The number is used for all payroll tax filings and employee declarations.
• Monthly filings (aangifte loonheffingen): Employers must file a monthly payroll tax return (aangifte loonheffingen) by the last day of the following month (e.g., January's return due by 28/29 February). The return reports the total gross salary, withheld income tax, social security contributions, and employer premiums for the month. Payment is due at the same time. Large employers (payroll over a threshold) may need to file weekly or bi-weekly.
• Year-end statement (jaaropgaaf): By 31 January following the tax year, each employee must receive a jaaropgaaf (annual statement) showing total gross salary, withheld loonheffing, pension contributions, and other salary components. The employer also submits the jaaropgaaf data electronically to the Belastingdienst.

Employer Social Security Premiums (Werkgeverspremies)

• AOW/ANW/WLZ (volksverzekeringen): The combined rate of approximately 27.65% on the first income bracket (~€38,441) is paid by the employee (withheld from salary). However, the employer may contractually agree to cover these — in practice, the employee bears them.
• WW (unemployment insurance — werknemersverzekering): The employer pays a WW premium based on the employee's contract type. For employees with a permanent contract (vast contract): approximately 2.94%. For temporary contracts (tijdelijke contracten): approximately 7.94% (2026 rates). The premium is calculated on gross salary up to a maximum of approximately €72,000 per year.
• WIA (disability insurance — Werkhervattingsregeling): The employer pays a WIA premium at a rate of approximately 7.36% (2026) on gross salary up to the maximum wage limit (~€72,000). The rate varies slightly by industry sector (sectorale premie) but the standard rate applies to most businesses. The WIA covers long-term disability after 104 weeks of illness. The employer is also responsible for paying continued salary during sickness (loondoorbetaling bij ziekte) — 70% of salary (minimum wage) for up to 104 weeks.
• ZVW (Health Insurance Act — Zorgverzekeringswet): The employer pays a ZVW contribution of 6.57% (2026) on gross salary up to the maximum wage limit (~€72,000). The employee also pays an income-dependent contribution (nominal premium) directly to their health insurer. The employer contribution is in addition to the employee's nominal premium.
• Total employer cost on-cost: For an employee earning €60,000 gross, the employer's additional social security costs are approximately WW (2.94%) + WIA (7.36%) + ZVW (6.57%) = 16.87% or approximately €10,100 — making the total employer cost approximately €70,100. The AOW/ANW/WLZ component is borne by the employee, not the employer.

Mandatory Pension Participation

• Industry-wide pension funds (bedrijfstakpensioenfondsen): Many industries in the Netherlands have mandatory industry-wide pension funds (e.g., metalektro, bouw, horeca, zorg, onderwijs). If your business operates in a covered industry, you must register with the applicable pension fund and contribute a percentage of each employee's salary (typically 15–25% total, split between employer and employee). The coverage is determined by the CAO (collective labour agreement) for the industry.
• Company pension (ondernemingspensioen): If no industry-wide fund applies, the employer must offer a company pension that meets the minimum standards under the Pensioenwet. The most common arrangement is a defined contribution (DC) plan with a premium of approximately 20–30% of pensionable salary (employer share typically 50–70% of the total premium). The pensionable salary is usually salary minus a franchise (franchise — approximately €17,000 in 2026) — the AOW offset.
• Pension registration: The employer must register the pension plan with the Belastingdienst (for tax approval) and with De Nederlandsche Bank (DNB) for regulatory oversight. DC plans through insurance companies (verzekeraars) or PPIs (Premium Pension Institutions) are common for SMEs. The employer's pension contributions are deductible for corporate tax; the employee's contributions may be deductible (if paid from gross salary via the pensioengevend loon arrangement).
• Netherlands Pension Act (Wet Toekomst Pensioenen — WTP): The 2023 Pension Act reforms Dutch pension system from defined benefit (DB) to defined contribution (DC) by 2028. All pension funds must transition by 1 January 2028. Key changes: the new DC system is contribution-based with collective risk-sharing, no guaranteed benefits, and individual age-dependent accrual. Employers should plan for the transition cost and communication burden.

Employee Benefits and Costs

• Holiday allowance (vakantiegeld): By law, all employees receive 8% of gross salary as holiday allowance, typically paid in May or June. The allowance is calculated on the gross annual salary (including overtime, commission, bonus) and is subject to loonheffing and social security. Many employers pay this as a lump sum.
• Minimum wage (minimumloon): As of 2026, the Netherlands has a statutory minimum wage of approximately €14.00 per hour (indexed semi-annually). The minimum wage applies to all employees aged 21 and over. Lower rates apply for younger employees (ages 15–20 at 30–80% of the full rate).
• Holiday days (vakantiedagen): The statutory minimum is 20 days per year (based on a 5-day working week). Most CAOs and employment contracts provide 25–30 days. Unused holiday days must be carried forward for at least 6 months (and may accumulate for up to 5 years under the Wet arbeidsmarkt in balans). On termination, all accrued but unused days must be paid out.
• 13th month and bonuses: Many CAOs and contracts provide a 13th-month payment (eindejaarsuitkering) of approximately 6–8% of annual salary, paid in November/December. Bonuses and profit sharing are common and are subject to special payroll treatment (bijzonder tarief — a flat withholding rate of approximately 36–49% depending on the amount, reconciled in the annual tax return).
• Company car (auto van de zaak): A company car provided for private use is a taxable benefit in kind (bijtelling). The addition is calculated as a percentage of the car's catalogue value (CO₂-dependent): 22% for most cars, 16% for electric vehicles (2026, phasing up to 22% by 2031). The addition is added to the employee's taxable salary and subject to loonheffing. The employer can deduct the car's costs (lease, fuel, maintenance) against corporate tax.

DGA Salary (Gebruikelijk Loon)

• Minimum salary requirement: A director-major shareholder (DGA) of a BV must pay themselves a minimum salary of at least €56,000 in 2026 (indexed annually). Alternatively, the salary must equal the highest salary of the most comparable employee in the company (if any), or 75% of the salary of a comparable employee in a similar position in another company — whichever is highest. In practice, the €56,000 statutory minimum is the default for most DGAs.
• Lower salary — 30% ruling DGAs: DGAs who qualify for the 30% ruling may reduce their gebruikelijk loon to the lower of: the actual salary paid (if lower than €56,000) or the 30% ruling salary threshold (~€46,107 in 2026). This is a common planning strategy — the DGA pays themselves a lower salary (€46,107), receives the 30% tax-free allowance on top, and keeps more profit in the BV (taxed at 19–25.8%).
• No pension accumulation on low DGA salary: The DGA's AOW state pension accrual is based on the salary paid. A very low DGA salary results in lower AOW build-up. DGAs should consider voluntary pension arrangements within the BV to compensate.
• DGA employment contract: A DGA must have a written employment contract (arbeidsovereenkomst) with the BV. The contract specifies the salary, duties, holiday days, and notice period. The DGA is both an employee (for tax purposes) and a director (for company law purposes).

For full details on the DGA structure, gebruikenlijk loon, and dividend/salary optimisation, see our DGA Guide →. For the 30% ruling and its interaction with DGA salary, see our 30% Ruling Guide →.