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Payroll administration

If your company starts up operational activities within the Netherlands, your employees are on a Dutch payroll. This means you are subject to the various regulations and obligations of the Dutch taxation system. Residence and work permits are often required for non-Dutch employees. Furthermore, you will always have to consider the extensive social system in the Netherlands. Employer obligations often reach beyond the obligations of their counterparts in other countries.

In order to be able to account for all amounts paid out, you are subject to a legal obligation of having and updating payroll records. You will have to pay wage tax and social security premiums each period (generally on a monthly or four-weekly basis). The government uses these premiums to pay for the unemployment and disability benefits.

In certain cases, you will have to provide insurers, pension funds, various government bodies and sector funds with periodical, specific information. Furthermore, the Dutch government has imposed employer obligations regarding the correct documents, such as employment contracts, regulations and personnel manuals.

Employer obligations regarding holidays and leave of absence

Employer obligations regarding absenteeism and sick leave

Employer obligations regarding salary, allowances and benefits

Outsourcing payroll administration to a local player

Fully or partially outsourcing your payroll administration of your Dutch personnel to a local player will relieve you of a huge burden and extensive 'red tape'. Bol International has various professionals available focusing on payrolling and HRM. They can offer support regarding:

  • Payroll administration
  • Application of measures, levies and discounts
  • Preparing employment contracts, personnel manuals and/or regulations
  • Maintaining contact with the Dutch Tax Department and UWV
    (government body checking compliance with your employer obligations, for instance)
  • Arranging the remuneration of non-Dutch employees
    (for example the 30% rule or salary split).

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Is having payroll records mandatory in the Netherlands?

As soon as you hire staff, you are a ‘withholding agent’ as an employer and you therefore have the obligation to have and update payroll records. Being a withholding agent means that you have to withhold amounts of tax and social security premiums from the employees’ wages. The payroll is the instrument the Tax Department uses to check your records. Bol International can support you professionally in this respect.

Is an employer free to determine employees’ wages?

In principle, yes, provided you pay above the minimum wage and include an 8% holiday allowance. However, if a CLA is applicable, the wages and other conditions may have been negotiated in the CLA. This always concerns the minimum remuneration. You are free to exceed these amounts.

Does an employee have to be paid even if he/she is not working?

The general rule is ‘no work, no pay’. Therefore, if someone is not working, you do not need to pay a wage. However, some exceptions apply.

For example, every employee is entitled to at least four weeks of holiday per year. During this scheduled holiday, in which the employee is not working, his/her wage must be paid out as normal. Furthermore, employees are entitled to continued wage during absence due to illness. During a maximum period of 2 years, at least 70% of the wage must be paid on absence during contractual working hours. Furthermore, several other leave types apply, entitling the employee to continued full or partial wage.

What is the UWV?

The UWV (Uitvoeringsinstituut Werknemersverzekeringen - Employee Insurance Agency) is the government body responsible for the implementation of social insurance and providing labour market and data services.

The UWV's tasks cover four areas:

  • Jobs: UWV supports employers when recruiting new personnel, and assists the unemployed in finding a new job.
  • Indications: UWV assesses the degree of incapacity for work of your employees, and reviews options regarding return to work or reintegration.
  • Paying out: UWV assesses whether an employee is entitled to a benefit, and if yes, the amount and duration of this benefit.
  • Data management: UWV ensures that data on work and benefits only has to be passed on to the government once.