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. As you withhold wage tax and pay this tax to the Tax and Customs Administration, the employee will not pay income tax or will pay less 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 (Wet langdurige zorg, Wlz)
  • General Child Benefit Act (AKW)

You withhold the national insurance contributions and pay the contributions to the Tax and Customs Administration. You are not obliged to pay a contribution for the General Child Benefit Act (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, bear the full cost of the contributions.

Income-dependent contribution pursuant to the Health Care Insurance Act (Zvw)

Pursuant to the Health Care Insurance Act (Zvw) employees are required to pay a nominal contribution for their health care insurance to a health care insurer. In addition, you pay the Tax and Customs Administration an employer's contribution pursuant to the Health Care Insurance Act (Zvw) for your employee. In some instances your employee pays a contribution pursuant to the Health Care Insurance Act (Zvw). The umbrella term for the contribution pursuant to the Health Care Insurance Act (Zvw) and the employer's contribution pursuant to the Health Care Insurance Act (Zvw) is 'income-dependent contribution pursuant to the Health Care Insurance Act (Zvw)'.

The manner in which you calculate the payroll taxes is explained in Calculating payroll taxes.

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