Every year the Dutch tax office publishes wage tax tables from which the exact amount of payroll tax to be withheld can be determined given a certain amount of salary, and certain parameters applying to the employment and the employee.

In the withholding tables a distinction is made between five groups of employees:

1. employees who are residents of the Netherlands
2. employees who are residents of Belgium
3. employees who are residents of another EU country, Norway, Liechtenstein, Iceland, Switzerland or a BES island
4. employees who are residents of Suriname or Aruba
5. employees who are residents of a third country, that is, a country that does not fall under the above mentioned groups.

For Dutch residents the following tables are provided:

The “white” tables for wages from current employment, where a distinction is made between wage period (day, week, four weeks, month or quarter) and a special table applying to a-periodical remuneration (like bonusses or severance payments).

Similar tables are provided for income from previous employment (the so-called “green” tables). Special tables exist for a-periodical income from certain insurance benefits related to old age, decease of a partner and (AOW, ANW and AIO) benefits.

The amount of the withholding is in first instance dependent on the applicable Dutch income tax rates and the rates of the Dutch social security premiums due. In particular the latter can vary, depending on age, and scope of the social security coverage.

For an overview of current rates of the Dutch income tax and national social security contributions please consult our publication Dutch tax rates for individuals.  

Because the Dutch income tax rates are progressive they cannot just be applied to the cumulative salary during the year. By applying the withholding tables, the income is supposed to be evenly earned through the specified periods so that the effective withholding rate is based on the effective tax rate over the total income earned during the entire year.

In the withholding tables certain standard allowances/credits are discounted, which can include:

• the general tax credit (algemene heffingskorting)
• the employed person's tax credit (arbeidskorting)
• the elderly person's tax credit (ouderenkorting)
• the single elderly person's tax credit (alleenstaande-ouderenkorting)
• the young disabled rebate (jonggehandicaptenkorting)
• the life-course leave tax credit (levensloopverlofkorting) - abolished per 1 January 2012.

Every employee who meets the conditions is entitled to the payroll tax credit. The employee must request for the payroll tax credits to be applied (for example in the “Wage tax statement” that the employee is legally required to fill out at the start the of the employment).

An exception applies to the young disabled person's tax credit: even if the employee does not receive the payroll tax credit the employer may consider young disabled person's credit.

If the employee did not ask the employer to apply payroll tax credits, the employee can still apply these credits in his/her Dutch income tax return.

Go to >   The payroll service package of TAXci

Go to >    Index page - Payroll obligations in the Netherlands