Employment

Running Dutch Payroll: What the Employer Withholds and Pays

Updated: 14 August 2026 Employer Payroll Tax

Dutch payroll runs on a single combined levy with several components, filed monthly or four-weekly. Understanding which parts come out of the employee’s gross and which sit on top of it explains the gap between what an employee costs and what they receive — and it is the first thing a foreign employer needs before quoting a salary.

The combined levy

The Dutch employer withholds and remits a single payroll levy (loonheffing) made up of four components:

Wage tax (loonbelasting), an advance on the employee’s income tax.
National insurance contributions (volksverzekeringen): state pension, surviving dependants and long-term care.
Employee insurance contributions (werknemersverzekeringen): unemployment, sickness and disability — carried by the employer.
The healthcare insurance levy (Zvw), carried by the employer as an employer contribution.

The distinction that matters for budgeting: wage tax and national insurance come out of the employee’s gross salary, while employee insurance contributions and the healthcare levy sit on top of it. That second group is what turns a gross salary into a materially higher employer cost.

What determines the amount

Three variables move the employer contributions. The sector classification of the company, since several contribution rates are set per sector. The contract type, with permanent contracts attracting a lower unemployment contribution than flexible ones — a deliberate policy incentive that makes permanent employment cheaper per euro of salary. And the company’s own history, since certain disability contributions are experience-rated for larger employers.

The rates are set annually, so the calculation is refreshed each January rather than carried forward.

The monthly cycle

The payroll declaration (loonaangifte) is filed monthly or four-weekly and reports every employee: salary, withholdings, contributions and hours. The remittance follows the filing. The declaration also feeds the government’s wage data register, which other authorities rely on — which is why accuracy matters beyond the tax itself.

Before the first payslip, three items are needed from each employee: the citizen service number (BSN), a copy of a valid identity document verified in person, and a statement of whether the payroll tax credit is applied. That last point avoids a common error: applying the credit at two employers at once produces an assessment for the employee later.

Two facilities worth knowing

The work-related costs scheme lets an employer provide benefits free of payroll tax within a budget, and keeps specific categories outside that budget entirely: the free allowance sets out the three routes.

The 30% ruling allows a portion of salary to be paid free of tax to a qualifying incoming employee (30% in 2026, 27% from 2027): the 30% ruling covers the conditions and the application.

The director-shareholder case

A director-shareholder of their own company runs payroll for themselves, at the customary salary level, from the first payment. Whether employee insurance contributions apply depends on the shareholding and control position — a sole shareholder-director generally falls outside them, which changes the calculation considerably. The DGA salary rules set out the Dutch side and the annual filing picture the position for a US owner.

For the full employer cost including holiday allowance, pension and sick pay, see employer costs beyond gross salary.

Advice, free of obligation

Would you like our team to take a look at your situation?

Tell us where you stand or what you’re planning. Our team replies with advice, free of any obligation.

Part of Doing Business in the Netherlands — the complete 2026 guide.

Frequently Asked Questions

What does a Dutch employer withhold from salary? +

A single combined payroll levy: wage tax and national insurance contributions come out of the employee's gross, while employee insurance contributions and the healthcare levy are carried by the employer on top.

How often is Dutch payroll filed? +

Monthly or four-weekly, reporting each employee's salary, withholdings, contributions and hours, with the remittance following the filing.

Why do permanent contracts cost less in contributions? +

The unemployment contribution is lower for permanent contracts than for flexible ones, a deliberate policy incentive. Over a full year the difference is meaningful per employee.

What do I need before the first payslip? +

The employee's citizen service number, a verified copy of a valid identity document, and a statement on whether the payroll tax credit is applied. Applying the credit at two employers at once creates an assessment for the employee later.

Does a director-shareholder pay employee insurance contributions? +

Generally a sole shareholder-director falls outside them, since the insurances presuppose a relationship of authority. The position depends on the shareholding and control arrangement and is worth confirming on the specific facts.

Sources Belastingdienst · KVK · wetten.overheid.nl Last updated: 14 August 2026