This post is also available in: Nederlands (Dutch)
Most employees and benefit recipients in the Netherlands are subject to wage tax. Dutch wage tax is characterized as a withholding tax by a deduction from the salary, pension, benefit or annuity of a taxable employee, pensioner or benefit recipient. The employer / withholding agent must apply the provisions of the Wage Tax Act.
Initially it was the intention that the wage tax was – as far as possible – a definitive levy on the wages of employees that should prevent an income tax assessment. If the income tax deduction could not be avoided, the payroll tax had to be a withholding tax on the income tax, whereby the amount possibly to be paid on tax had to remain as limited as possible.
In addition to this basic function, wage tax has been increasingly used over the years as a tax policy instrument, with the aid of which certain politically desirable goals are pursued. Good examples are the taxation of a environmental friendly company car and employer benefits when hiring certain type of employees or in case of providing study opportunities.
The levy of Dutch tax, social security and/or healthcare contribution premiums can be influenced by secondment or when employees are living and partially working from abroad. In these cases no Dutch tax and/or premium social security may be due. In most exemption cases a declaration of the foreign social security institue will be required.
TaxAble can guide you through all national and international issues that may arise with the application of wage tax and premium. Due to our one stop shop service we can also handle all wage tax administration compliance.