WORKING IN THE NETHERLANDS
The most transparent, accurate and reliable contract management company in the market
Access Financial, a leading payroll company in the Netherlands, offers professional and tailor-made solutions since 2003. Our core business is managing contractors’ salaries and our diligent and experienced team brings you a high-quality service to beat your expectations.
We aim to enable individuals who wish to operate in the Netherlands with the benefits and status of an employee.
Payroll and taxes in the Netherlands
The Payroll Advisor BV (TPA) is our Dutch company. We offer a broad range of compliant solutions for contractors working in the Netherlands that cover all the needs that a contractor may have. Unless and until we have performed our client fact find and taken account of the preferences of an agency or corporate client, we cannot propose one solution over another.
Our consultative approach does mean that with AF, the contractor always receives the perfect fit.
We offer three solutions as follows:
- Employment – Umbrella company solution
- Limited Company
This solution is for contractors looking for no administration and on-time payments. The contractor on this solution becomes an employee of TPA in the Netherlands. We register the contractors in the Netherlands, calculate the taxes, make payment to the tax office and contractors on time while assuring the regulatory compliance. We also support our contractors and answer their queries without any hidden charge.
Contractors who have and are familiar with running their limited company may choose to do so when working in the Netherlands. The limited company may be either a Dutch company or a foreign one that we localise. In this solution:
- there are no employer social charges for a controlling director and shareholder of a company
- there are no employee social charges for a controlling director and shareholder of a company
- the corporation tax on the company’s profits, if any, is payable in the Netherlands
In the following sections, we will compare and contrast the two offerings to help all AF’s clients make an informed choice.
A brief description of each solution
- Social Security
- Which solution is best for you
|Duration Limits||No limits||<12 months|
|VAT (TVA) registration required||NA||If turnover is more than €25,000 if a Dutch company. If a foreign company the threshold is nil|
|Must have legal right to work||Yes||Yes|
Knowledge Migrant Worker Programme
The Dutch Immigration Authorities (IND) introduced a simplified immigration procedure to attract Highly educated or talented foreign employees to the Netherlands; The knowledge migrant regulation (“KMR”). Not only is the KMR procedure the fastest immigration procedure, with the residence permit as knowledge migrant in place it will not be necessary to obtain a separate work permit in the Netherlands. Furthermore, the spouse or partner of de knowledge migrant will have work authorisation (“arbeid vrij toegestaan”) as well. TPA holds a KMR licence from the IMD.
Conditions for the Knowledge Migrant Regulation
1. The foreign employee intends to remain and reside in the Netherlands for a period exceeding three months
2. The remuneration of the employee exceeds the income criteria of the KMR.
The gross remuneration as mentioned in the employment contract of offer letters are taken into account. Only gross amounts clearly mentioned and for example vacation allowance will be considered remuneration by the IND.
Four monthly income criteria:
- Applicant over 30 years (2020): Eur 4.612 excluding 8% holiday allowance;
- Applicant under 30 years (2020): Eur 3.381 excluding 8% holiday allowance;
- For graduates that are employed by a KMR employer within one year after graduation in the Netherlands (search year) (2020): Eur 2.423 excluding 8% holiday allowance;
- For European Bluecard (2020): Eur 5.403 excluding vacation allowance;
These income criteria do not apply for employees that will perform scientific research activities, or for medical doctors training to be specialists. The income for these employees must equal minimum wages.
A BSN (burgerservicenummer) is the citizen service number, a unique registration number for everyone who lives in the Netherlands.
The BSN will facilitate any interaction with the Dutch authorities: starting a job, opening a bank account, deducting your taxes and social security contributions, using the healthcare system, applying for benefits, announcing a change of address etc. It is also used to combat identity fraud and misspelled names.
The Sofi number (sofinummer) was the previous name for the social security number, issued by the Dutch Tax Office (Belastingdienst). From November 2007, those with Sofi numbers had them automatically converted into a BSN, and in January 2014, the Belastingdienst ceased issuing Sofi numbers.
Note that a BSN does not automatically allow expats to work in the Netherlands. Depending on their country of origin, they may need to apply for a work permit.
|Swedish Social Insurance Agency (Försäkringskassan)||Not necessary||Necessary|
The 30% ruling is a tax advantage for highly skilled migrants working in the Netherlands. The ruling allows employers to offer 30% of an employee’s salary to them tax-free, meaning that the employee only pays tax over 70% of their gross Dutch salary.
The tax break that highly skilled migrants in the Netherlands receive is meant as a reimbursement for the costs incurred when relocating to the Netherlands, such as travel costs, costs for visas and housing costs, to name a few. The 30% ruling is coordinated by the Dutch tax office (Belastingdienst).
On January 1st 2019, the Dutch government announced plans to shorten the 30% ruling from eight years to five in its “Confidence in the Future” document. This change will apply to both newcomers applying for the ruling and those already receiving the tax advantage.
National income tax on earned income (employment and business income) is at the following rates (for 2020)
Tax rates in the Netherlands 2020
Below you find tax rates applicable for the tax year 2020. Tax rates on your income form employment are listed in box 1. Note that different tax rates are applied to persons who reached the Dutch statutory retirement age.
Filing your taxes over 2019? Check the 2019 tax rates listed under 2019!
|Box 1 (income from work and owner-occupied home ownership)|
|Tax bracket (income range)||Applicable tax rate|
|€ 0 – € 68,507||37.35 %|
|€ 68,508 and up||49.50 %|
Included in the tax rate are premium social security which are levied primarily in the first bracket.
The tax on wages or salaries tax is an advance levy on the personal income tax. The salaries tax and the social security contributions are levied jointly on earned income or benefits.
The employer or body paying the benefit deducts the tax and contributions directly from the salary or benefit, and pays these to the tax department. Many persons pay only salaries tax, and are not subject to income tax. For persons with a high income or many tax-deductible items, the salaries tax serves as an advance levy, and they are subsequently issued with an income tax return and an assessment.
Do you have to file a Dutch income tax return?
Everyone who receives a declaration letter from the Dutch Tax and Customs Administration has to file an income tax return. If you have not received a letter, but expect to have to pay over €45, or get a refund of over €14, you should also file a tax return.
Value Added Tax (VAT)
The standard rate of VAT in the Netherlands is 21%.
Taxes on Dividends
The dividend tax in the Netherlands is a type of income tax on dividend payments made to the company’s shareholders. According to the Dutch taxation law, there is a fixed tax on dividends. Certain exemptions apply if the company meets some specific criteria. Our lawyers in the Netherlands can provide complete information about tax compliance for any Dutch company.
Dutch dividend tax
The Netherlands has a maximum tax rate for dividends of 25%. However, Dutch companies are not subject to taxation on dividends if they observe the provisions of the participation exemption. The Dutch participation exemption applies to dividends and capital gains derived from shareholdings of at least 5%. In order to qualify for the participation exemption, subsidiaries need to be active and to be subject to the Dutch tax test (they need to be taxed according to Dutch tax principles). Moreover, less than 50% of the assets of the company need to be passive assets. If Dutch subsidiaries fulfill these conditions, their dividend income is not subject to tax.
For companies that do not qualify for the participation exemption in the Netherlands, any profit derived from the shares will be taxed at the normal corporate tax rate. Subsidiaries in the Netherlands may be granted a special credit if they have been subject to corporate income tax but do not fulfill all of the necessary requirements to fully benefit from the participation exemption. The tax credit has a maximum amount value of 5%.
According to Dutch law, companies incorporated in the Netherlands are Dutch residents and are liable on their worldwide income. Non-resident companies operating in the Netherlands are only taxed on their income produced in the country.
The corporate income tax in the Netherlands is calculated on all of the profits derived from conducting the business in the country, including foreign-source incomes, passive incomes and capital gains.
The Dutch social security contribution is levied together with income tax. The contribution is 28.15 percent of your salary, but will never exceed about 9.400 euros. In principle, every Dutch tax resident is liable to pay social security contributions on their earned income.
The table shows the approximate net retention for a typical contractor using AF solutions. The following assumptions apply:
- Daily Rate €500 per day
- Working five days per week for 12 months
- Expenses are 10% of turnover
- A single person without dependents
We provide these figures for illustration, and you should request a detailed calculation from your AF Solutions Consultant.
Which solution is best for you
Depends on the circumstances of the contractor and what they, the recruitment business and their end clients seek.
In the table, we have set out the main differences between the solutions which may guide you to what is best for you. If you are still unsure or in doubt, please ask your AF Solutions Consultant.
|Status||Employed||Employed by company/Independent of client|
|Full social benefits||Yes||Yes|
|Personal registration needed||Yes||Yes|
|Complexity of solution for the contractor||Lower||Higher|
|Professional Insurances required||No||Yes|
TPA holds NEN 4400-1 Certification
NEN 4400-1 is a national standard that set requirements for temporary work businesses and contractors of work, including subcontractors, that have their registered office in the Netherlands with respect to the payment of taxes and social insurance contributions and the legitimacy of employment in the Netherlands. The aim of the standard is to limit the risk of recovery and penalties for employers from the Dutch Tax and Customs Administration and other government agencies.
NEN 4400-2 has been developed for companies that have their registered office outside the Netherlands. This standard includes requirements for checking and assessing any company having its registered office outside the Netherlands that provides workers for the purpose of working under the supervision or direction of a third party and for testing and assessing any contractor or subcontractor having its registered office outside the Netherlands in order to determine that they are organised in such a way that it may be safely assumed that obligations from employment are complied with.