What are payroll taxes?
Payroll taxes consist of the following:
- wage tax
- national insurance contributions
- employed person's insurance contributions
- income-dependent contribution pursuant to the Health Care Insurance Act (Zvw)
Wage tax
You withhold wage tax on the wages. Wage tax is an advance levy of income tax.
National insurance contributions
National insurance schemes are social security insurance schemes, with participation which is obligatory by law, that insure residents and employees in the Netherlands against the financial consequences of old age, death, exceptional medical expenses and costs of children. The national insurance schemes consist of:
- General Old Age Pensions Act (AOW)
- Surviving Dependants Act (Anw)
- Long-Term Care Act (Wlz)
- General Child Benefit Act (AKW)
You withhold the national insurance contributions and pay the contributions to the Tax Administration. You pay no contribution for the AKW.
Employed persons' insurance contributions
Employed persons' insurance schemes are social security insurance schemes, with participation which is obligatory by law, that insure employees against the financial consequences of illness, occupational disability and unemployment. The employed persons' insurance schemes are:
- Sickness Benefits Act (ZW)
- Invalidity Insurance Act (WAO) / Work and Income according to Work Capacity Act (WIA)
- Unemployment Insurance Act (WW)
You, as the employer, are responsible for paying all contributions. There is one exception: you may pass on up to 50% of the differentiated Whk (Return to Work Fund) contribution to the employee.
Income-dependent contribution pursuant to the Health Care Insurance Act
The Health Care Insurance Act (Zvw) provides compulsory health care insurance. Under this Act, an employee must pay a nominal premium to a health care insurer for their health insurance. In addition, you pay us an employer’s Zvw contribution (werkgeversheffing Zvw) for your employee. In some situations, your employee pays a Zvw contribution (bijdrage Zvw), which you withhold from their net wages. The income-dependent Zvw contribution is the umbrella term for the Zvw contribution and the employer’s Zvw contribution.
