If you or your company has a registered office or workplace in the Netherlands with employed staff, you must deduct the correct payroll tax from the wages of the employees. The payroll tax is constructed from income tax, employee insurance contributions, social security contributions, and income-dependent health care contributions.
You are required to deduct Dutch payroll taxes when;
- Your company has its registered office in the Netherlands
- You have a permanent establishment in the Netherlands
- Post, hire or transfer staff in/to the Netherlands.
- Your employee works on the Dutch continental shelf.
- Your employee is subject to the national insurance plans of the Netherlands.
In some situations you are required to deduct taxes; even if your company has its main registered office in another country.
If you employ staff then you must do the following;
- Register as an employer with the tax and customs administration. This will result in the receipt of a payroll tax number along with the necessary forms. Your payroll tax number is then used when filing returns and in connection with other types of contact with tax and customs administration offices.
- Ask your employee to provide you with a written statement that includes their last name and initials, address and zip code, and their place of residence, country and region of residence along with their date of birth and burgerservicenummer or telephone number. tax identification and social security (also known as sofinummer).
- Verify and record the identity of each employee in the case of foreign workers, including checking whether they are allowed to work within the Netherlands.
- Create a payroll record.
- Determine the elements of the employee’s salary and then calculate the correct associated taxes and contributions required by law.
- File your tax return by the due date listed and pay the calculated taxes. The tax and customs administration office will inform you of the date and method of submitting the declaration correctly.
In the event that the employer or the worker do not comply with the obligations related to the payroll tax or the confirmation of the identity of the worker, they must apply the ‘anonymous person rate’.
Under specific conditions, individuals can offset a VAT payment with a payroll tax return. However, to do this, the Dutch form must be used (verzoek loonheffingen verrekening met teruggaaf by the way).
If an organization hires temporary staff through a broker or subcontracts the work to a contractor or subcontractor, the individuals hired must pay payroll tax on these staff members. If the company does not follow these procedures, the Dutch authorities will hold the employer accountable and thus hold them liable.