Understanding Dutch employment laws and employment contracts

This page is your go-to guide for navigating employment laws and contracts in the Netherlands. We are here to help talented individuals find exciting opportunities in the financial sector while ensuring compliance with Dutch employment regulations. In this section, we will explore important laws like the ‘Inlenersbeloning’ and the ’30-20-10%-ruling’ to keep you informed in your career journey.

On this page

Inlenersbeloning

Inlenersbeloning, translated as client remuneration, is a critical aspect of Dutch employment law, particularly concerning (external) employees who are employed by staffing agencies. It refers to the obligation of employers to ensure that external workers receive equal pay and benefits as permanent employees for comparable work.

The Dutch tax system

In the Netherlands, you are required to pay taxes once you earn money while living here. The Belastingdienst (Dutch tax office) collects the taxes. The most relevant taxes for Young Professionals are the following:

Different kinds of tax
(See table below)

Tax Penalties
When income is undeclared you risk a penalty. So, please find out what is necessary. Young Financials is here to support you!

The Box System
The Box System is for tax returns on income to make sure taxes are paid equally and fair. The system is divided into three boxes with different incomes and tax rates: box 1, box 2, and box 3.

Box 1 – incomes from salary
Annual taxable income (gross) between € 0 – 69.399 counts 37,07% as the total tax rate. If your income is above € 69.399+ the tax rate is 49,50%.

Box 2 – income from interest in a limited company
Incomes from interest, such as dividends, know a total tax rate of 26,90%.

Box 3 – Income from assets, investments, and savings
Individuals can hold assets worth up to € 50.650 and couples can have assets worth up to € 101.300 without being taxed.

 

Type of tax

Dutch word

Short explanation

Income tax

Inkomstenbelasting

Tax you pay on the money you earn while working. Via the annual tax return, you can declare this income tax online or with the help of a tax advisor. If you are employed, the company will withhold this wage tax from your salary.

Payroll tax

Loonheffing

Tax that is withheld from your salary which saves you from having to pay it later as income tax. The payroll tax consists of tax on your salary and national insurance contributions, e.g., pensions. This is why you fill in the ‘statement of data for payroll taxes’ at the beginning of your employment.

VAT sales tax

Omzetbelasting/BTW

Taxes from sales that businesses pay. This is why (mostly 21%) BTW is always added to the price of goods and services. Within the quarterly sales tax declaration this amount needs to be paid to the Belastingdienst.

Annual income tax return

Aangifte inkomstenbelasting

Tax return that only needs to be paid if the Belastingdienst informs you that you are required to do so. This is to balance your paid taxes with financial conditions like the income of your partner, additional earnings, studies, mortgage, and healthcare costs. You submit your annual income tax return in the period of March 1 to April 30.

30-20-10% tax ruling

For employees hired from abroad, the Netherlands has a favorable tax ruling to compensate employees for extraterritorial costs. When the required conditions are met according to the Dutch tax authorities, you can benefit up to 30% tax break on your salary.

 

If you meet the following conditions, you can apply for the 30-20-10% tax ruling:

  • You are in paid employment as an employee
  • The gross salary has to surpass a minimum
  • You and your employer agree in writing that the 30-20-10% ruling is applicable
  • You have a specific expertise that is difficult to find in the Dutch employment market
  • You were recruited from outside of the Netherlands

The most common contracts in the Netherlands

Companies in the Netherlands often work with permanent and temporary contracts. When you have had several temporary contracts for a period of more than 3 years, you will automatically switch to a permanent employment and receive a permanent contract.

With Young Financials, we offer Young Professionals a 1-year contract with career opportunities at the client’s company. After this year, our candidates are offered an internal contract with the client. For Young Professionals with more experience, we offer a hiring and selection construction.

Main aspects
When you get a contract in the Netherlands, there are a few main aspects of the contract your employer must abide by:

  • Duration of the contract
  • Condition of pre-employment screening
  • Role description
  • Allowances
  • Your wages
  • Working hours
  • Overtime pay
  • Probationary period (proeftijd)
  • Holiday leave
  • Salary
  • Notice period and pension contributions
  • Social security contributions
  • Additional expenses such as public transport and study budget
  • Company privacy and confidentiality policies
  • Non-competition clause

Want to know more? Get in touch!

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