Setting up and maintaining payroll in the Netherlands
The Netherlands is a well-developed Western European country with a surprisingly diverse economy for its small size. Many businesses choose to operate in the nation due to its favorable business regulations and high quality of life.
If you are interested in expanding your business to the Netherlands, an early step is likely to be hiring staff locally. This generally requires you to set up a Dutch entity and establish a local payroll. This can be a complicated process and may take longer than expected, possibly causing delays in your expansion efforts and potentially costing you in lost revenues.
At Horizons, we specialize in providing custom Netherlands payroll outsourcing services for businesses aiming to hire and expand in the Netherlands. Our experts can manage the setup and ongoing running of your Netherlands payroll, whether or not you have an established entity in the country.
If you have an entity
Do you already have a registered subsidiary in the Netherlands? We can provide you with full Netherlands payroll outsourcing services to help you establish and run your Dutch payroll. Your entity will be the employer of record, but we are here to handle all the HR, administration, tax compliance, and so on, providing our expertise in the unique Dutch employment regulations to help you grow in the Netherlands faster.
If you don’t have an entity
If you haven’t yet established a Netherlands subsidiary, then our full Netherlands payroll outsourcing service is ideal for your business. We will provide our Dutch subsidiary to act as your employer of record, with our team handling all of the administrative processes, HR, contracts, and legal compliance.
This flexible, low-risk, and scalable solution enables you to enjoy all the benefits of hiring staff in the Netherlands, without having to navigate the difficult employment landscape.
The easiest route to Netherlands expansion
Netherlands payroll guide
What are the regulations for withholdings and taxes in the Netherlands?
The Netherlands has extensive social programs in place for the public, and these are, in part, funded by both employer and employee contributions. In general, employers will need to pay slightly more than 20% of employee salaries again towards these social funds.
The corporate tax rate in the Netherlands is 19% for lower profit levels, and this increases to 25% on taxable earnings over €200,000. These rates are set to drop in 2021.
The country follows a progressive income tax model, with rates ranging from 9.7% and 49.5% for different levels of earnings.
Entitlements and terminations of employees
The process of terminating employees in the Netherlands can be very complicated and may be difficult to follow properly without assistance. Most employers aim to terminate by coming to an agreement with employees, as this is usually the simplest and cheapest method.
Sometimes, severance payments may be necessary, such as when a worker has been with the company for over two years. In this case, they are entitled to 1/6 of monthly salary for every half-year of employment for the first ten years. For ten years or more of service, employees should receive ¼ of monthly salary for every half-year of employment. Employees over the age of 50 may be entitled more. There is a usual limit of €75,000, but courts may order extra payment in some situations.
We recommend seeking advice when terminating employees and calculating severance payments in the Netherlands.
How to establish Netherlands payroll outsourcing
Setting up a Dutch payroll yourself can be a complicated process. You will need to strictly adhere to all relevant laws and register with the tax office in the Netherlands. The entire process and compliance work could take weeks or even months.
At Horizons, we provide Netherlands payroll outsourcing setup and management services. Additionally, we can offer our Dutch subsidiary for you to use as employer of record for your workers, so you can benefit whether or not you have a registered entity in the Netherlands. Our experts on expansion into the Netherlands can also run your HR, taxes, contracts, and more to make your venture as seamless and efficient as possible.