Payroll & Employment Guide Netherlands

Although written contracts aren't always legally required in the Netherlands, they’re strongly recommended. Employers must still provide written confirmation of key employment terms within one month. Contracts can be fixed-term or permanent, but temporary contracts may only be renewed a limited number of times before automatically becoming permanent.

Notice periods: From 1 month (for less than 5 years of service) to 4 months (for more than 20 years of service).

Termination of employment: It can occur due to redundancy, long-term illness, underperformance, or a damaged working relationship

In the Netherlands, employee benefits are designed to make sure workers are well taken care of, with things like paid vacation, sick leave, and parental leave being standard. These benefits help create a good balance between work and personal life, giving employees peace of mind.

• Mandatory benefits: Social security contributions, healthcare
• Common perks: Wellness programmes and reimbursements beyond mandatory healthcare contributions
• Leave policies: Annual leave, public holidays, maternity and parental leave, and sick leave

The Netherlands has a progressive income tax system, meaning tax rates increase as income rises, with a top rate of 49.5% on higher earnings. Employers are responsible for withholding income tax and social security contributions directly from employees’ salaries and remitting these to the tax authorities as advance payments.

Personal income tax rate:

• 35.82% tax on income up to €38,441
• 37.48% tax on income between €38,441 and €76,817
• 49.50% tax on income over €76,817

VAT: 3 VAT rates, which are 21%, 9%, and 0%

Tax allowances: General tax credit, labour tax credit, personal allowance

Additional tax reliefs: Mortgage interest expenses, charitable contributions, alimony payments, medical and disability expenses, life insurance premiums, home office deduction, and more

In the Netherlands, employers are required to pay salaries as specified in individual employment contracts or collective labour agreements, and these salaries must be at least the statutory minimum wage set by the government.

Salary payment deadline: The last working day of the month

Taxes and contributions payments deadline: Monthly

Payroll declarations deadline: On a monthly, quarterly, and annual basis

Payroll currency: EUR

Want to explore the Netherlands’ regulations about payroll, salaries, and contributions in more detail?

The Dutch Labour Code sets the main legal framework for employment, clearly defining the rights and responsibilities of both employers and employees. It emphasises strong worker protections, covering contracts, termination, working hours, and leave, whether for fixed-term or permanent roles.

Total employment cost: Total employment cost for employers includes base salary, mandatory contributions like social security, and legally mandated benefits

Minimum wage: €14.06 per hour

Probation period: Up to 2 months for open-ended or fixed-term contracts of 2+ years, and 1 month for shorter fixed-term contracts

Foreign citizens must obtain the appropriate work permits and visas to work in the Netherlands. The process, permit type, and costs vary based on the applicant’s nationality, job role, and length of stay.

Types of permits: EU Blue card

Process length: Three to four months

Process cost: 2200 EUR main candidate; 1200 EUR dependent

An Employer of Record (EOR) in the Netherlands lets you hire legally without setting up a local entity. The EOR becomes the legal employer and handles:

• Legal employment and contracts
• Payroll processing
• Tax withholding
• Benefits administration
• Onboarding/offboarding employees

With a Professional Employer Organisation (PEO) in the Netherlands, you remain the legal employer while the PEO provides HR and administrative support. This solution works best if you already have a legal entity and need help managing operations, including:

• HR support and workforce administration
• Payroll and benefits management
• Compliance and local labour law guidance
• Employment contracts assistance

Native Teams offers a payroll calculator tailored to the Netherlands' labour laws, helping you quickly estimate net and gross salaries, employer and employee contributions, and other mandatory deductions.