15 February 2023 Add expertise tag Add service tag Add country tag
Payroll & HR services Global Mobility Services International labor and cross border assignments Payroll & HR Tax compliance

In the Netherlands, wage tax is imposed on taxable wages.

Taxable wages
Taxable wages include all remunerations, benefits, and allowances that an employee receives for the fulfillment of employment, unless explicitly exempt, and include:

  • Cash payments
  • Remunerations received from third parties  
  • Income in kind, including the savings arising from the private use of a company car, products from own company, company housing, lunches and beverages at work, etc., benefits derived from stock and option incentive plans
  • Bonuses
  • Severance payments
  • Benefits derived from non-qualifying insurance and pension plans.

Exemptions and exempt income
Dutch wage tax law provides for a closed system of exemptions and exempt income.

The main exemptions relate to the premiums paid by the employer for qualifying pension plans and the specific exemptions provided for employee benefits and allowances under the so-called Labor Costs Regulation (in Dutch, "Werkkostenregeling” or “WKR”).

In the international context, the 30%-regulation enables employers to pay out 30% of the gross pay of qualifying employees as a tax-free allowance for extraterritorial costs, costs that an expatriate employee incurs to adjust to the Netherlands since it is not their home country. This rule also applies to Dutch employees assigned abroad. Compensating extraterritorial costs can be provided tax-free by their nature, and the 30% ruling only quantifies these expenses at 30% of gross pay without the obligation to provide evidence.  For more information on the 30%-regulation, we refer to https://www.tax-consultants-international.com/publications/expatriate-incentive-the-30-regulation