Payroll taxes consist of the following:
- wage tax
- national insurance contributions
- employed person's insurance contributions
- income-dependent contribution pursuant to the Health Care Insurance Act (Zvw)
Wage tax
You withhold wage tax on the wages. Wage tax is an advance levy of income tax. As you withhold wage tax and pay this tax to the Tax and Customs Administration, the employee will not pay income tax or will pay less income tax.
National insurance contributions
National insurance schemes are social security insurance schemes, with participation which is obligatory by law, that insure residents and employees in the Netherlands against the financial consequences of old age, death, exceptional medical expenses and costs of children. The national insurance schemes consist of:
- General Old Age Pensions Act (AOW)
- Surviving Dependants Act (Anw)
- Long-Term Care Act (Wet langdurige zorg, Wlz)
- General Child Benefit Act (AKW)
You withhold the national insurance contributions and pay the contributions to the Tax and Customs Administration. You are not obliged to pay a contribution for the General Child Benefit Act (AKW).
Employed persons' insurance contributions
Employed persons' insurance schemes are social security insurance schemes, with participation which is obligatory by law, that insure employees against the financial consequences of illness, occupational disability and unemployment. The employed persons' insurance schemes are:
- Sickness Benefits Act (ZW)
- Invalidity Insurance Act (WAO) / Work and Income according to Work Capacity Act (WIA)
- Unemployment Insurance Act (WW)
You, as the employer, bear the full cost of the contributions.
Income-dependent contribution pursuant to the Health Care Insurance Act (Zvw)
Pursuant to the Health Care Insurance Act (Zvw) employees are required to pay a nominal contribution for their health care insurance to a health care insurer. In addition, you pay the Tax and Customs Administration an employer's contribution pursuant to the Health Care Insurance Act (Zvw) for your employee. In some instances your employee pays a contribution pursuant to the Health Care Insurance Act (Zvw). The umbrella term for the contribution pursuant to the Health Care Insurance Act (Zvw) and the employer's contribution pursuant to the Health Care Insurance Act (Zvw) is 'income-dependent contribution pursuant to the Health Care Insurance Act (Zvw)'.
The manner in which you calculate the payroll taxes is explained in Calculating payroll taxes.
Social Security & Medicare Tax Rates
Social Security's Old-Age, Survivors, and Disability Insurance (OASDI) program and Medicare's Hospital Insurance (HI) program are financed primarily by employment taxes. Tax rates are set by law (see sections 1401, 3101, and 3111 of the Internal Revenue Code) and apply to earnings up to a maximum amount for OASDI.
The rates shown reflect the amounts received by the trust funds. In certain years, the effective rate paid by employees, employers, and/or self-employed workers was less than the rate received by the trust funds, with the difference covered by general revenue. See the footnotes for details.
| 1937-49 | 1.000 | -- | 1.000 | -- | -- | -- |
| 1950 | 1.500 | -- | 1.500 | -- | -- | -- |
| 1951-53 | 1.500 | -- | 1.500 | 2.250 | -- | 2.250 |
| 1954-56 | 2.000 | -- | 2.000 | 3.000 | -- | 3.000 |
| 1957-58 | 2.250 | -- | 2.250 | 3.375 | -- | 3.375 |
| 1959 | 2.500 | -- | 2.500 | 3.750 | -- | 3.750 |
| 1960-61 | 3.000 | -- | 3.000 | 4.500 | -- | 4.500 |
| 1962 | 3.125 | -- | 3.125 | 4.700 | -- | 4.700 |
| 1963-65 | 3.625 | -- | 3.625 | 5.400 | -- | 5.400 |
| 1966 | 3.850 | 0.350 | 4.200 | 5.800 | 0.350 | 6.150 |
| 1967 | 3.900 | 0.500 | 4.400 | 5.900 | 0.500 | 6.400 |
| 1968 | 3.800 | 0.600 | 4.400 | 5.800 | 0.600 | 6.400 |
| 1969-70 | 4.200 | 0.600 | 4.800 | 6.300 | 0.600 | 6.900 |
| 1971-72 | 4.600 | 0.600 | 5.200 | 6.900 | 0.600 | 7.500 |
| 1973 | 4.850 | 1.000 | 5.850 | 7.000 | 1.000 | 8.000 |
| 1974-77 | 4.950 | 0.900 | 5.850 | 7.000 | 0.900 | 7.900 |
| 1978 | 5.050 | 1.000 | 6.050 | 7.100 | 1.000 | 8.100 |
| 1979-80 | 5.080 | 1.050 | 6.130 | 7.050 | 1.050 | 8.100 |
| 1981 | 5.350 | 1.300 | 6.650 | 8.000 | 1.300 | 9.300 |
| 1982-83 | 5.400 | 1.300 | 6.700 | 8.050 | 1.300 | 9.350 |
| 1984 a | 5.700 | 1.300 | 7.000 | 11.400 | 2.600 | 14.000 |
| 1985 a | 5.700 | 1.350 | 7.050 | 11.400 | 2.700 | 14.100 |
| 1986-87 a | 5.700 | 1.450 | 7.150 | 11.400 | 2.900 | 14.300 |
| 1988-89 a | 6.060 | 1.450 | 7.510 | 12.120 | 2.900 | 15.020 |
| 1990 and later b, c | 6.200 | 1.450 | 7.650 | 12.400 | 2.900 | 15.300 |
| a In 1984 only, an immediate credit of 0.3 percent of taxable wages was allowed against the OASDI taxes paid by employees, resulting in an effective employee tax rate of 5.4 percent. The OASI and DI trust funds, however, received general revenue equivalent to 0.3 percent of taxable wages for 1984. Similar credits of 2.7 percent, 2.3 percent, and 2.0 percent were allowed against the combined OASDI and HI taxes on net
earnings from self-employment in 1984, 1985, and 1986-89, respectively. b Beginning in 1990, self-employed workers are allowed a deduction, for purposes of computing their net earnings, equal to half of the combined OASDI and HI contributions that would be payable without regard to the contribution and benefit base. The OASDI contribution rate is then applied to net earnings after this deduction, but subject to the OASDI base. c For 2010, most employers were exempt from paying the employer share of OASDI tax on wages paid to certain qualified individuals hired after February 3. For 2011 and 2012, the OASDI tax rate is reduced by 2 percentage points for employees and for self-employed workers, resulting in a 4.2 percent effective tax rate for employees and a 10.4 percent effective tax rate for self-employed workers. These reductions in tax revenue due to lower tax rates are being made up by transfers from the general fund of the Treasury to the OASI and DI trust funds. Beginning in 2013, an additional HI tax of 0.9 percent is assessed on earned income exceeding $125,000 for each married individual filing separately, $200,000 for individuals filing as single, and $250,000 for married couples filing jointly. This additional HI tax rate is not reflected in the tax rates shown in the table. |