Moving to the Netherlands? This Guide Reveals Salary Trends, Tax Breaks and Dutch Payroll Solutions

Are you a new expat or an employer of expats in the Netherlands? Then this comprehensive Netherlands expat guide about the tax system, salary trends, and payroll solutions is everything you’ve been looking for! This guide will step-by-step guide you through understanding the Dutch salary landscape, how expats are taxed in the Netherlands, and how employers in the Netherlands should manage Payroll, especially if they have expats on their team.

Understanding the Dutch Salary Landscape

The Netherlands is such an attractive location to relocate to because of its high salaries. The Netherlands is the 8th highest-paying country in the world in terms of its minimum salary, which is €1,725 gross for 40 hours of work for employees older than 21. The average gross salary in the Netherlands is also very high, coming in at €44,000 per year, or approximately €3,666 per month.  This is a considerable amount, considering the reasonable cost of living in the Netherlands. However, there are many different factors that influence the salary to which employees are entitled. These factors increase and get more complicated if the employee is an expat. Some of these influential factors include whether the employee is an expat, if the employee is a highly skilled migrant, the age and education level of the employee, as well as whether the employee has certain exemptions or benefits, such as the 30% ruling.

Luckily, there’s no need to make complicated calculations regarding salaries in the Netherlands. Simply use the Free Unusual Payroll Dutch Salary Calculator to quickly and easily calculate the salary of employees in the Netherlands. This calculator also serves as a Dutch tax calculator considering all the above mentioned factors, including age, residency status, educational level, etc.

Taxation for Expats in the Netherlands

If you are an expat in the Netherlands and have no clue where to start in understanding and filing taxes, this section is for you!

Dutch tax for Expats Basics

• The tax year is from 1 January to 31 December.
• The tax return date is the 1st of May, with joint filing and tax return extensions being possible.
• Dutch residents have to pay income tax on their worldwide income.
• Non-residents only have to pay tax on specific Netherlands-sourced income.
• Income tax in the Netherlands is divided according to the following categories:

1. Box 1: Employment income, self-employment income, director’s fees, and income from a primary residence.
2. Box 2: Profits from a substantial shareholding (shareholding of minimum 5%).
3. Box 3: Income gained from savings and investments.

For 2024, the income tax rate for those who haven’t reached the state pension age (AOW-leeftijd), is as follows:

• 36,97% if your annual gross income is up to € 75,518.
• 49,50% if your annual gross income is more than € 75,518.

Everything Expats need to know about the Netherlands 30% Ruling

One of the major reasons highly skilled migrants are interested in relocating to the Netherlands is the incentives provided by the Dutch government, one of which is the 30% ruling. This is a significant benefit for those with a Highly skilled migrant visa in the Netherlands. These tax incentives allow certain expats who adhere to specific requirements to pay less income tax. With this ruling in place, the taxable amount of the expat’s salary gets reduced to 70%. Thus, 30% of their wages are tax-free. Originally, the percentage remained at 30% for 5 years. However, the regulations have recently changed:

• 30% of the salary is tax-free for the first 20 months.
• After that, 20% of the salary is tax-free for 20 months.
• In the final 20 months, 10% of the salary is tax-free.

Navigating Dutch Payroll as an Employer

The Netherlands has many rules and regulations regarding employers' compliance with managing their company’s payroll. For this reason, specific service providers in the Netherlands and globally specialize in managing different payroll processes. Unusual Payroll is one of these companies that specializes in Dutch payroll services. Our comprehensive services cover the management of companies’ payroll, immigration, and employee compliance.

Furthermore, as a sponsor company with IND recognition, Unusual Payroll offers Employer of Record (EOR) services. EOR services are a solution for companies who want to grow their team in another country where they do not necessarily have a company established. EOR offers an alternative approach to personnel recruitment involving employment through an Employer of Record on a payroll basis. By working with a Payroll Company like Unusual Payroll, the employee will secure a work and residence permit via the Dutch employment contract, and their spouse and children are granted the same rights. The Unusual Payroll’s team of specialized consultants handle the entire process. The client company covers the costs of the application fees, payroll management, accounting fees, and the employee’s salary.

For more information about Employer of Record services and payroll processes, or to start the process of relocating yourself or your employees to the Netherlands, contact Unusual Payroll today!