Netherlands Payroll Knowledge

This article explains how payroll works for employees engaged in the Netherlands through RemoFirst, covering pay schedules, deductions, tax, social security, insurance, leave, working time and end-of-employment entitlements. Employees in the Netherlands are subject to Dutch payroll taxes, social security contributions and statutory holiday allowance requirements. 

If you have a question that is not answered below, contact RemoFirst support, and the team will be happy to help.

Payroll Schedule in the Netherlands

How often are employees paid in the Netherlands?

Employees in the Netherlands are paid monthly.

When are employees paid in the Netherlands?

Employees in the Netherlands are paid on the last working day of the month.

What currency are employees paid in the Netherlands?

Employees in the Netherlands are paid in Euros (EUR, €).

Payslips in the Netherlands

When are Dutch payslips issued?

Payslips in the Netherlands are uploaded to the platform within approximately 2 days of the salary payment.

What deductions appear on a Dutch payslip?

Common deductions on a Dutch payslip include:

• Income Tax
• Social Security contributions
• Health Insurance contributions
• Pension-related allowances, if applicable

Why are deductions so high in the Netherlands?

The Netherlands has relatively high statutory taxes and social security contributions compared to many countries. Much of the social security cost is bundled into the income tax withheld in the first tax bracket, which is why Dutch payslip deductions can look large.

Salary Structure in the Netherlands

How are salaries structured in the Netherlands?

Salaries in the Netherlands are generally structured as an annual gross salary paid over 12 monthly installments.

Is holiday allowance included in Dutch salaries?

Yes. The standard statutory holiday allowance in the Netherlands is 8% of the annual salary. In the RemoFirst setup, this allowance is generally already incorporated into the employee's gross salary package, rather than being paid as a separate lump sum.

Salary Proration in the Netherlands

Why was my first salary in the Netherlands lower than expected?

Employees who join during a month in the Netherlands receive a prorated salary, and are only paid for the portion of the month worked. The formula is:

(Days Worked ÷ Workable Days in Month) × Monthly Gross Salary

Tax and Social Security in the Netherlands

Updated for 2026: The Box 1 income tax rates were adjusted for 2026. The figures below reflect the current year.

What taxes apply to employees in the Netherlands?

Employees in the Netherlands are subject to progressive income tax under what is known as Box 1. For 2026 there are three brackets:

• 35.75% on income up to €38,883
• 37.56% on income from €38,883 to €78,426
• 49.50% on income above €78,426

The rate in the first bracket includes national insurance contributions (27.65%), which is why the first band is taxed at a higher combined rate than income tax alone.

What social security contributions apply in the Netherlands?

Employees in the Netherlands contribute towards:

• Old Age Pension (AOW)
• Survivor Benefits (Anw)
• Long-Term Care (Wlz)
• Health Insurance (Zvw)

Payroll manages all statutory deductions automatically. Most national insurance contributions are collected through the first income tax bracket rather than as separate line items.

Health Insurance in the Netherlands

Is health insurance mandatory in the Netherlands?

Yes. All residents and employees in the Netherlands must maintain health insurance.

Does RemoFirst provide private health insurance in the Netherlands?

No. Employees in the Netherlands are responsible for arranging their own health insurance.

Can clients provide a health insurance allowance in the Netherlands?

Yes. Clients may provide a taxable allowance to help employees in the Netherlands cover their health insurance costs.

Pension in the Netherlands

Is a pension provided in the Netherlands?

RemoFirst does not provide a supplementary occupational pension scheme in the Netherlands. Employees are still covered by the Dutch state pension (AOW), which is funded through national insurance contributions collected via payroll.

Can clients provide a pension allowance in the Netherlands?

Yes. Clients often provide a pension allowance of between 8% and 16% of gross salary in the Netherlands. This allowance is treated as taxable income.

Public Holidays in the Netherlands

How many public holidays are there in the Netherlands?

The Netherlands observes approximately 11 public holidays annually.

Are employees automatically paid extra for public holidays in the Netherlands?

This depends on the employment agreement and applicable policies. There is no automatic statutory right to extra pay for working a public holiday in the Netherlands, so treatment should be reviewed on a case-by-case basis.

Annual Leave and Holiday Allowance in the Netherlands

What holiday entitlement applies in the Netherlands?

Employees in the Netherlands are entitled to statutory holiday entitlement under Dutch law. The statutory minimum is four times the weekly working hours per year, which is 20 days for a full-time five-day week, and many employers provide more.

Does holiday allowance differ from annual leave in the Netherlands?

Yes. In the Netherlands these are two different things. Holiday allowance (Vakantiegeld) is the 8% cash payment described in the salary structure section, while annual leave refers to paid time off work.

Working Hours in the Netherlands

What are standard working hours in the Netherlands?

A standard full-time schedule in the Netherlands is 40 hours per week.

What are the maximum working hour limits in the Netherlands?

Dutch working time limits are:

• An average of 48 hours per week over a 16-week period
• Up to 55 hours per week in certain periods
• A maximum of 12 hours per day

What rest periods apply in the Netherlands?

Employees in the Netherlands are entitled to:

• 11 hours of rest between shifts
• 36 consecutive hours of weekly rest

What breaks apply in the Netherlands?

Break entitlements in the Netherlands are:

• 30 minutes after 5.5 hours worked
• 45 minutes after 10 hours worked

Expenses and Reimbursements in the Netherlands

How are expenses reimbursed in the Netherlands?

Expenses in the Netherlands are paid separately from payroll.

What documentation is required for Dutch expense claims?

For an expense claim in the Netherlands, the expense must:

• Be business related
• Include valid receipts
• Clearly identify the employee or employer
• State the business purpose

See, Expense Reimbursement Guidelines for Netherlands employees

Can mileage be reimbursed in the Netherlands?

Yes. For 2026, the tax-free mileage reimbursement for business travel by a private vehicle in the Netherlands was raised to a maximum of €0.25 per kilometre, applied retroactively to 1 January 2026, up from €0.23. Employers are not obliged to reimburse the full maximum, so the rate actually applied may be lower depending on policy. Fuel expenses are generally not reimbursed separately for personal vehicles, since the per-kilometre rate is intended to cover them.

What happens if documentation is missing in the Netherlands?

If documentation is missing, the reimbursement in the Netherlands may be rejected or treated as taxable income.

Probation in the Netherlands

What probation periods are allowed in the Netherlands?

Probation periods in the Netherlands depend on the contract type.

For permanent contracts:

• Up to 2 months

For fixed-term contracts:

• Under 6 months: no probation permitted
• 6 months to 2 years: up to 1 month
• Over 2 years: up to 2 months

Probation clauses that exceed these statutory limits are invalid under Dutch law.

Employment Changes in the Netherlands

What changes commonly require contract updates in the Netherlands?

Examples of changes in the Netherlands that commonly require a contract update include:

• Salary increases
• Working hour changes
• Pension allowance changes
• Employment type changes

Are both permanent and fixed-term contracts supported in the Netherlands?

Yes. Both contract types are supported under Dutch employment law.

Resignation in the Netherlands

What happens when an employee resigns in the Netherlands?

An employee resigning in the Netherlands must comply with the notice requirements in their contract. Final pay may include:

• Outstanding salary
• Accrued leave
• Other contractual entitlements

Are fixed-term contracts automatically terminated in the Netherlands?

Yes. Fixed-term contracts in the Netherlands automatically end on the agreed end date.

Termination in the Netherlands

Can employees be terminated without cause in the Netherlands?

Dutch law provides strong dismissal protection, so termination generally requires one of the following routes:

• Approval from the subdistrict court
• Approval from the UWV (the public benefits agency), typically for economic or long-term illness grounds
• A mutual settlement agreement (vaststellingsovereenkomst)

On most employer-initiated terminations, a statutory transition payment (transitievergoeding) is also due. 

This is generally one-third of a month's gross salary per year of service, subject to a maximum that is indexed each year.

What happens during sickness in the Netherlands?

Employers in the Netherlands are generally required to continue wage payments during sickness for up to 104 weeks, usually at a minimum of 70% of salary. Special protections apply to employees on sick leave, including restrictions on dismissal during the sickness period.

For any payroll question about the Netherlands not answered above, contact RemoFirst support and the team will be glad to help.