Netherlands

General Information

• Full Name: The Kingdom of the Netherlands
• Population: 17.70 million (World Bank 2022)
• Capital: Amsterdam
• Primary Language: Dutch
• Main Religion: Christianity
• Monetary Unit: Euro
• Main Exports: Transport and machinery equipment, agricultural products, mineral fuels and food
• GNI per Capita: US $60,230 (World Bank, 2022)
• Internet Domain: .nl
• International Dialing Code: +31

How do I Say in Dutch?

• Hello: Hallo
• Good Morning: Goedemorgen
• Good Evening: goedenavond
• Do you speak English?: Spreek je Engels?
• Goodbye: Tot ziens
• Thank you: Dank u
• See you: later Ik zie je later

How do I Write the Day in the Netherlands?

Dates are usually written in the day, month and year sequence. For example, 1 July 2024 or 01/07/24.

The Netherlands, with its strategic location at the heart of Europe, robust economy, and forward-thinking business environment, presents a compelling case for companies looking to expand their global footprint. Renowned for its open economy, the country is a hub for international trade, innovation, and sustainability, making it an attractive destination for businesses across various sectors. 

The Netherlands offers unparalleled access to European and global markets, thanks to its world-class logistics and transportation infrastructure. The Port of Rotterdam, the largest port in Europe, and Amsterdam Airport Schiphol, one of Europe’s top airports, provide efficient gateways for goods and passenger flow, reinforcing the country's position as a leading logistics hub.

The Dutch government fosters a pro-business climate characterised by a supportive regulatory environment, competitive corporate tax rates, and a strong legal system. The Netherlands boasts a vibrant startup ecosystem, supported by a wide range of accelerators, incubators, and venture capital investors. Amsterdam, in particular, is recognized as a startup hub, offering a dynamic environment for innovative startups and scaleups to thrive.

The Netherlands is at the forefront of innovation, particularly in sectors such as agri-food, high-tech systems, life sciences and health, renewable energy, and creative industries. The country’s focus on research and development (R&D) is supported by public-private partnerships, top-ranked universities, and research institutions. The Dutch government offers incentives for R&D activities, including significant tax reductions.

Sustainability and green initiatives are at the core of Dutch business practices. The Netherlands is a leader in sustainable agriculture, renewable energy, and circular economy projects, offering opportunities for companies in these fields. The government actively supports sustainable development through various incentives and policies, aligning with global environmental goals.

Beyond business advantages, the Netherlands offers a high quality of life, with excellent healthcare, education, and public services. Its open, tolerant society, rich cultural heritage, and diverse international community make it an appealing place for expatriates and their families.

Doing business in the Netherlands offers strategic advantages, from access to a significant European market to a supportive business environment and a focus on innovation and sustainability. For companies looking to expand or start their operations in Europe, the Netherlands provides a stable, efficient, and competitive platform to grow and succeed in the global marketplace. With its strategic location, commitment to innovation, and quality of life, the Netherlands stands out as a top destination for business investment and development.

The Netherlands, with its strategic European location, thriving economy, and commitment to innovation, stands out as a prime destination for global investors. Known for its open and highly competitive market, the country offers a myriad of opportunities for businesses looking to invest in a stable, innovative, and forward-looking economy. 

The Dutch government is known for its pro-business stance, offering a supportive regulatory framework that fosters entrepreneurship and innovation. Competitive corporate tax rates, efficient customs procedures, and policies aimed at reducing bureaucratic hurdles create an attractive environment for foreign investors. The Netherlands Foreign Investment Agency (NFIA) and similar bodies provide comprehensive support to businesses setting up in the country, from navigating regulatory requirements to finding the perfect location for operations.

A commitment to research and development (R&D) positions the Netherlands at the forefront of innovation in key industries, including agri-food, clean tech, high-tech systems, life sciences, and health. The country's ecosystem is conducive to innovation, supported by collaborations between businesses, universities, and government institutions. Tax incentives for R&D activities further enhance its appeal as a hub for technological advancement.

The Dutch workforce is among the most educated, skilled, and multilingual in the world, offering businesses a significant competitive advantage. The proficiency in English and other languages among the Dutch population facilitates seamless international business operations, making the Netherlands an attractive location for multinational corporations.

Investing in the Netherlands offers a blend of strategic advantages, from its position as a gateway to Europe to its commitment to innovation and sustainability. The country's pro-business environment, combined with a highly skilled workforce and a focus on future technologies, creates a fertile ground for investment and growth. 

The Netherlands is a leading destination for foreign direct investment (FDI) in Europe, distinguished by its strategic location, innovative economy, and business-friendly environment. The country's commitment to embracing global trade, coupled with its robust infrastructure and highly skilled workforce, creates a fertile ground for FDI across various sectors. 

The Netherlands' strategic position at the heart of Europe offers unmatched access to the European Single Market, making it a preferred entry point for companies looking to operate within the EU. Its world-class logistics infrastructure, including the Port of Rotterdam and Amsterdam Airport Schiphol, further enhances its appeal as a gateway for international trade, providing efficient connections to global markets.

The Dutch government's pro-business stance is evident in its competitive tax regime, straightforward company registration processes, and incentives designed to foster innovation and sustainability. The Netherlands offers a conducive environment for R&D activities, supported by innovation credits and public-private partnerships that drive technological advancements in sectors such as life sciences, agri-food, IT, and clean energy.

FDI Incentives and Support

The Netherlands provides a range of incentives to attract and retain foreign investors, including tax benefits for R&D projects, a favorable fiscal climate for international companies, and various grants and subsidies for sustainability initiatives. The Netherlands Foreign Investment Agency (NFIA) offers personalized guidance and support to foreign investors, facilitating market entry and expansion.

A Commitment to International Trade

The Dutch economy is highly integrated with the global economy, underscored by a long history of international trade. The country's trade policies, EU membership, and extensive network of trade agreements create a stable and open environment for foreign investors.

Sector-Specific FDI Opportunities in the Netherlands

• Technology and Innovation: The Netherlands is home to thriving tech hubs and innovation districts, offering a supportive ecosystem for startups and established tech companies. The country's focus on digitalisation and high-tech industries presents significant opportunities for FDI in software development, artificial intelligence, and cyber security.
• Logistics and Distribution: Leveraging its position as a logistics and distribution powerhouse, the Netherlands offers ample opportunities for companies in transportation, warehousing, and supply chain management, particularly those looking to establish European distribution centers.
• Green Energy and Sustainability: With its ambitious sustainability targets, the Netherlands is an attractive destination for investments in renewable energy, circular economy projects, and sustainable technologies.
• Life Sciences and Health: The country's strong healthcare infrastructure and focus on life sciences research make it a prime location for investments in pharmaceuticals, medical devices, and biotechnology.

FDI in the Netherlands is driven by a combination of strategic advantages, including its geographic location, innovative and sustainable business environment, and sector-specific opportunities. The country's comprehensive support for foreign investors and commitment to being an open, competitive economy make it a standout destination for FDI in Europe.

In the Netherlands it is not mandatory to make payments to either employees or the authorities from an in-country bank account.

Normal bank opening hours in the Netherlands are 09:00 to 18:00 Monday to Friday, with some staying open later on Thursday or Friday evenings. Some banks are also open on Saturday mornings.

This information is currently being updated for 2024.

A company is required to have a registration in place with the Dutch authorities (Companies House); however, a legal entity is not required to process payroll in the Netherlands.

It normally takes up to 6 weeks from the start of the registration process before the Wage Tax Number is issued by the authorities. Prior to obtaining a Wage Tax Number, the payroll can be processed; however, the wage tax can only be paid once the Wage Tax Number has been received. The Wage Tax Number is used when submitting payroll tax returns and for contact with the Dutch Tax and Customs Administration.

There are approximately 40 Dutch tax authority offices in the Netherlands and the representative office is allocated to a company based on the location of that company’s offices, operations, etc.

An agent or representative company is not required by law to be licensed to make any tax and/or social security fillings on behalf of their customer (the employer), however most tax advisors and agents in Holland are a member of a professional organisation.

This information is currently being updated for 2024.

Arriving in the Netherlands

Before an employer can apply for a Netherlands Work Permit for a non-EEA national, it is necessary to show that attempts have been made to fill the position from the local and EEA labour markets.

Staying in the Netherlands

After having lived in the Netherlands for three years on a Work Permit, it is often possible for an individual to obtain Permanent Residency. Thereafter, the individual is free to take up any lawful employment and no longer requires an Employer-Sponsored Work Permit.

The most recent list of the documentation required should be requested from the Netherlands Embassy as the eligibility and requirements are updated periodically.

In the situation where an employee is staying in the Netherlands longer than four months, the employee has to register at one of the 18 municipalities. The following are required for this registration: -

• A Valid Identification Card

• A Living Address from the Home Country

Refer to the following website for further information https://www.government.nl/topics/immigration

Leaving the Netherlands

When a foreign employee leaves the Netherlands, there is no formal responsibility on the employer. However, the employee needs to de-register his registration with the local authorities.

Please note, even though this is not an employer responsibility, it is recommended that the employer works with the employee by reminding them to de-register. If the employee fails to de-register the tax office will base their data on the records held by the local authorities and deem the leaver to be still working in the Netherlands. This could lead to additional administrative burden on the employer. In addition, if the employee returns to the Netherlands in the future, they will find their records from the tax office and local authorities are now incorrect and it could require significant effort to rectify this.

This information is currently being updated for 2024.

The tax year runs from 1st January to 31st December.

Under the current Income Tax Act, residents are liable for income tax on their world-wide income. Non-residents residing in an EU Member State or in a country with which the Netherlands has established a double taxation convention providing for the exchange of information may opt for enforcement of the sections of the Income Tax Act for residents. Non-residents are taxed only on the income from a limited number of sources in the Netherlands. Foreign diplomats and the staff of certain international institutions are exempt from Dutch income tax.

Wage Tax

Wage tax is due to be paid to the authorities by the last working day of the month following when the income was generated.

For example, wage tax due from January’s pay must be paid no later than Friday 28 February 2020.

Late filing and payment of income tax can attract penalties and interest payments.

30% Ruling

If an employee is recruited from abroad to work in the Netherlands, with a specific expertise that is scarce or absent in the job market in the Netherlands, he or she may be entitled to the 30% tax ruling. The ruling reduces the gross salary (the basis for wage tax and social security) to 70% on top of which a tax-free remuneration of 30% is paid via the payroll as a tax-free allowance intended to cover the higher expenses incurred by living in the Netherlands.

Both employee and employer must jointly request the application of the 30% rule from Dutch tax office. The employee will have to have significant and relevant work experience (considered scarce in the Netherlands), have higher education, be hired from abroad <150 km from the Dutch border and earn a salary of at least €39.467 (in 2022) waged tax per annum. The 30% ruling is generally limited to a five-year period.

If an employee is younger than 30 and has a Dutch academic master's degree (or has obtained an equivalent title in another country). The employee then has a specific expertise if your salary, not including the tax-free allowance in the Netherlands, is more than € 30,001 in 2022

Employees who plan to remain in the Netherlands long term and who are paying into the Dutch social security system should be advised that all the rights based on the gross salary and social security will decrease accordingly and be based on the 70% taxable portion.

The 30% allowance will have an impact in the tax-free reimbursement of extra territorial expenses and school fees as these are deemed to be included. 

This information is currently being updated for 2024.

In the Netherlands, social security is the public system that guarantees income and care in case of sickness, inability to work, unemployment, retirement, and death. The Dutch social security system comprises a large number of schemes. These schemes can be classified into 3 groups: employee insurance schemes, general insurance schemes and social provisions.

All residents (employees, self-employed and individuals not in employment) are insured under National Insurance schemes covering old age, death, long-term invalidity, certain medical expenses and child benefit. In addition, employees are insured against illness, long-term invalidity and unemployment.

Social security premiums are collected via the payroll, the employee’s contribution will be deducted from the employee’s fiscal salary (gross elements). The employer will pay the contributions for the employees as well as any employer’s portion to the various social security agencies. These payments are due to be paid to the authorities by the last day of the following month.

Pension Scheme

Each company can have its own pension scheme, this is sometimes mandatory under the collective labor agreement. The government pension is only the AOW which is paid through the wage tax.

This information is currently being updated for 2024.

Monthly

The monthly tax return needs to be filed electronically on a monthly basis.

Yearly

There is no year-end filing which needs to be completed and sent to the authorities, however when there is a pension withholding, a pension overview will need to be issued to the pension provider.

This information is currently being updated for 2024.

All new employees are required to be registered at the local municipality for their BSN citizen service number, this must be completed within 3 days of the employee starting the company.

The details required to set up a new start are as follows:

• Full Name
• Address
• Date of Birth
• Wage Tax Statement
• Citizen Service Number (BSN)
• Gender
• Marital Status
• Remuneration Information
• Copy of a valid employee ID that must be kept on record (passport for example, a driver’s license is not accepted)

Expat new starts are required to provide the following documentation:

• Passport
• Signed Contract
• Work Permit (If applicable)
• Residency Permit (If applicable)

Please note

• All employees will need to be able to identify themselves at their place of work, with a legal photo ID (passport, driver’s license etc.).
• There is no deadline for the registration requirements of an expat new start.

This information is currently being updated for 2024.

There is no reporting obligation on the employer’s side for leavers.

Please do check section 6 on visa requirements for recommendations in case foreign employees leave the Netherlands.

The final salary payments for leavers are due, on or before, the next pay date following the end of employment contract.

In the Netherlands employers must provide a payslip to their employees on the first month of employment and in general when the net salary changes, online payslips are legally acceptable.

It is not mandatory to make payments to employees and authorities from an in-country bank account.

It is mandatory to pay at least the net minimum wages into a bank account that is registered in the name of the employee. Cash payments are not allowed and are considered an economic crime.

The information required for the implementation of the payroll, would be all relevant data such as personal details, gross salary and benefits and deductions for the employees. Regarding the employer, no additional information is required once the applicable company registrations have been performed.

Reports

Payroll reports and documents must be kept for at least 7 years.

Netherlands Payslip Example

This information is currently being updated for 2024.

Works Council in the Netherlands

If a company has over 50 employees, a works council is mandatory according to Dutch law.

In the Netherlands, a works council (Ondernemingsraad (OR)) promotes and protects the interests of the employees in a company. The works council has rights, such as:

• the right to prior consultation in the event of major decisions and measures

• the right to prior consultation in the event of major investments

• the right of consent in the event of certain changes regarding terms of employment

• the right of consent concerning the appointment of prevention officers

• the right of consent concerning the place of employee data storage (i.e. payroll data)

The works council meets with the employer at least twice a year.

Foreign Employees in the Netherlands

Foreign employees who are required to work and pay tax in the Netherlands must have a Citizen Service Number or a Tax and Social Insurance Number. They must personally collect this number from an office of the Tax and Customs Administration.

CLA (Collective Labour Agreement) in the Netherlands

Please note that when there is a CLA (CAO in Dutch) applicable, the items mentioned above, need to be checked with the CLA and can be different based on what is agreed in the CLA.

A CLA is a written agreement between one or more employers and one or more trade unions about the labour conditions for all employees, such as wages, payment for extra work, working hours, probation period, pension education and health care.

Holiday Accrual and Calculations in the Netherlands

Every employee is entitled to a minimum of 4 times the number of working hours per weeks of paid holiday days per year. Every year there are up to 7 public holidays in the Netherlands.

A statutory “vakantietoeslag” (holiday supplement/allowance) of 8% of gross pay is paid once a year, normally in May or June. Holiday allowance can be paid monthly when it is agreed upon in the employment contract.

Maternity Leave in the Netherlands

All female employees are entitled to a total of 16 weeks (minimum) maternity leave on full pay with pregnancy treated as illness for the purposes of the Sickness Benefit Act. Of these 16 weeks, the first 4-6 weeks are planned to be taken as pregnancy leave (zwangerschapsverlof) prior to the birth of the child and the remainder as childbirth leave (bevallingsverlof) after the child has been born.

No statutory forms or documentation needs to be completed to process the maternity through the payroll. It is however necessary to report the pregnancy to the social security authorities (UWV) because the salary will be paid by them during the maternity leave. This can be directly to the employee, but it is more common that the employers continue paying the salary and the UWV will pay the employer. This is because some remunerations such as pension will remain.

Employees cannot claim any additional funds from the authorities in addition to their 16-week maternity pay paid by their employer. The 1919 Labor Act (replaced as from 1st January 1996 by the new Working Hours Act) prohibits the performance of work for at least two weeks before the date of birth and eight weeks after childbirth.

The same provisions are in place for public servants in the General Public Service Regulations. If pregnancy or childbirth results in incapacity for work, the employee is eligible for benefits equivalent to 100% of her salary, for the maximum of a year after the date of birth.

Paternity Leave in the Netherlands 

An employee’s partner is entitled to five days of paternity leave and during this period of leave, the employer must continue to pay 100% of their salary. The leave must be taken during the first four weeks after the baby’s birth.

From 1 July 2020, employees are entitled to take additional paternity leave for a maximum of five weeks. With this leave, the employee will not receive a salary, but a benefit from the UWV (Employee Insurance Agency).

An employee is entitled to this leave if the child was born on or after 1 July 2020 and the additional leave must be taken within six months of the birth. To be entitled to this leave, the employee must have taken the initial five days of paid paternity leave.

In order to receive the benefit, the employer must apply for the benefits for their employee from the UWV for their period of leave. The UWV will pay up to 70% of the employees’ salary, capped at 4.975,50 (2022) gross per month. If the employer pays at least 70% of the salary themselves during the leave, they can keep the UWV benefit themselves.

On 1 January 2019, paid leave for the adoption or fostering of a child increased to six weeks (up from four). The UWV will pay up to 100% of the employee's salary, capped at 4.975,50 (2022 gross per month. Leave must be taken over a period of 26 weeks (starting anytime up to four weeks before the adoption/fostering date), however employees can request to take blocks of adoption leave during that time period.

Employers can refuse to grant paternity leave only for compelling business reasons.

Sick Leave in the Netherlands

If an employee is unfit to work due to sickness, they are entitled to be paid 70% of their last earned salary during a 52-week period.

Additionally, as of this date, the WULBZ (law extension duty to continued payment of salary at sickness) became effective. This law regulates that the continued payment of salary comes at the expense of the employer, who must continue to pay the employee during the first 104 weeks of sickness at (a minimum of) 70% of the salary. Supplement up to 100% of the salary has been permitted in the first sickness year. In the second year up to 70% of the salary will continue to be paid.

Other Leave

• Calamity Leave: If an employee is unable to work due to unforeseen circumstances, they can make use of calamity leave in certain situations.
• Additional Leave: An employee is also entitled to leave days for moving house, weddings, funerals, GP visits and more. An employee should always check with their employer or review the Collective Labor Agreement known as “CAO” applicable to them.
• Part-Time Work: Employees who have been employed for at least 1 year with a company, consisting of more than 10 employees, are entitled to submit a request to their employer requesting that the employee works on a part-time basis.
• Working from Home: More and more people prefer to work from home from time to time. Though increasingly common, there is no provision formally arranged by law.

National Service in the Netherlands

The Netherlands does not have mandatory national service for its citizens

According to law in Netherlands, the maximum working time is 9 hours per day and 45 hours per week with the average working week being 40 hours.

The working week is usually organised over five days, with a mandatory legal minimum of 1 day of rest, normally a Sunday.

Employees whose religion observes a day of rest on a day other than a Sunday, may opt for Friday or Saturday as the rest day.

In the Netherlands as of 1 January 2024 a statutory minimum wage will take effect. The new rate is the minimum wage per hour and there will no longer be a monthly, weekly or daily minimum wage.

Employers are required by law to pay workers at least the hourly minimum wage. The hourly minimum wage is the same for all employees aged 21 years and older. The hourly minimum wage for employees under 21 depends on their age. 

Hourly minimum wage in Netherlands from 1 January 2024 is as follows:

There are multiple statutory holiday schedules within the Netherlands. Below are the statutory national holidays in the Netherlands for 2024.

This information is currently being updated for 2024.

Expenses

General expenses based on actual, original invoices will all have to be kept on file as these might be required by the authorities to confirm the nature of the expense.

Car mileage is calculated by Kilometer and is paid at a rate of 0.19 euros (data as of 2022).

Benefits

A company car is considered a taxable benefit in kind. The taxable amount is based on the type of car and the value of the car as per the Dutch tax office and this amount is then entered into the payroll and the resulting tax liability is calculated and paid as part of the monthly payroll process.

Pension Scheme

Most employers have included a collective pension scheme in their CAO. The employee contributes monthly an amount deducted from their salary and the employer may also contribute.

As we move into 2024, the Netherlands is implementing key updates affecting wage taxes, social security, the 30% ruling, and employment law. These changes reflect the Dutch government's efforts to adapt to economic conditions and align with policy goals.

Changes to the 30% Ruling

Significant changes are made to the 30% ruling, an essential tax exemption for expatriates moving to the Netherlands, effective from January 1, 2024:

1. Adjustment to Eligibility Ceiling: There's a cap introduced on the maximum salary eligible for the 30% ruling. Any income exceeding €233,000 annually will not qualify for this tax-free allowance. This adjustment is particularly applicable to employees beginning their employment in 2023 onwards.

2. Gradual Percentage Reduction: The 30% facility will see a phased reduction over five years. Initially, for the first 20 months, eligible employees can still benefit from the 30% tax-free allowance of their taxable employment income in the Netherlands.

These modifications are crucial for expatriates and employers, signaling a tighter policy that aligns with projected governmental fiscal goals and effectiveness of the scheme.

Please note that this document gives general guidance only and should not be regarded as an authoritative or complete statement of the law, regulations or tax position in any country. You should always seek specific advice for each specific situation. This document should not be relied upon as professional advice and activpayroll accepts no liability for reliance on its contents.

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