Understanding your Dutch payroll payslip

But right alongside the feeling is a document that deserves more attention than it usually gets: your pay slip. That neatly structured document, with columns, rows, and abbreviations, is often scanned, occasionally misunderstood, but always important.

Most employees don't exactly read their pay slip from top to bottom. Some check the net salary and close the tab. In the Netherlands, where the labor system is structured and employee protection is strong, it is important to understand what a payslip includes and what's the process behind it.

For employees, it means knowing where their money is going, what deductions are being made, and what benefits they will receive. For employers, it's about legal compliance, accurate salary payments, and building trust with their team.

In this blog, we’ll walk you through what payroll and payslips are, how they function, and why understanding payroll administration is important for everyone.

Payroll vs payslip

Let's start with the basics:

Payroll

Payroll is the process of compensating employees based on their working hours and ensuring accurate employee salaries. It includes ensuring everything is calculated correctly and reported properly.

Each month, employers gather data: timesheets, hours worked, bonuses, and sick days. They calculate the gross wage and wage tax, check compliance with the minimum wage, and apply tax deductions. Then comes social security contributions, pension splits, and finally, you see the net pay in your bank account.

Employers must also submit monthly reports to the Belastingdienst (Dutch Tax Office) through hr, outlining exactly what deductions have been made and what has been paid.

So yes, the entire process isn’t just about salary payments and deductions; it’s also about staying compliant with Dutch legislation.

Payslip

While payroll happens behind the scenes, pay slips are what employees receive. They include detailed information about employees' working hours, gross wages, wage tax deductions, net pay, and other items like pensions or unemployment funds. You’ll also see whether your holiday pay is being saved or is already been paid out.

In the Netherlands, providing payslips to the employees is a legal requirement, every month, even if nothing has changed since the previous one.

Think of it as a record of the employment relationship. It protects the employee and employer by documenting salary breakdowns, deductions, and overtime payments.

The Dutch payslip explained

Now that you know more about payroll and payslips, let’s break down what’s actually included in a Dutch payslip.

Pay slips in the Netherlands provide quite detailed information, and for a good reason. They usually start with:

• Personal details: Employee's Name, contract type, employment start date

• Employer details: Company name, location, and contact information

Next comes the finance: gross wages, taxable income, and net pay. The Netherlands applies different tax rates to various types of income, so payslips often show a split between income taxed at a standard rate and at a special rate (like bonuses).

There's also a line for holiday pay. By law, employees are entitled to at least 20 paid vacation days annually, with 8% holiday pay usually paid in May. Depending on the company, it might also be saved monthly and be visible on your payslip.

A key part of your payslip involves tax credits, which reduce the income tax withheld. The two main ones are:

• General tax credit (algemene heffingskorting): Automatically applied to most employees. This credit helps reduce how much income tax you owe. For retired people, a reduced version of this credit is available.

• Labour tax credit (arbeidskorting): Also applied automatically and depends on how much you earn. Everyone who works in the Netherlands, including expats, qualifies for this credit.

If you’re self-employed, the credit still applies, but instead of receiving it through payroll, you’ll see it calculated when you file your annual income tax return with the Dutch Tax Office.

At the bottom, you’ll usually find year-to-date (YTD) cumulative figures and the bank account where the salary transfer was deposited.

Payroll in the Netherlands

Behind every payslip is a system designed to protect workers and ensure fairness. Employers must maintain accurate records, issue pay slips promptly, and ensure that transfers of salaries are reported correctly to the tax office and other relevant authorities. Each payslip must include mandatory information, such as the employee's BSN (citizen service number), tax category, wage period, and the method of salary calculation, and be stored for at least seven years.

And if you’re employing international talent? There’s more to consider. Highly skilled migrants, for example, come with additional regulations: salary thresholds, tax regulations, and visa-related responsibilities.

While this is just a brief overview, we’ve also written a detailed blog post on highly skilled migrants in the Netherlands, so explore and dive deeper into the specific requirements!

Social contributions in 2025

In 2025, the Dutch income tax system remains progressive. The first band taxes income at 36.98%, and income above a certain minimum threshold, currently €75,518, is taxed at 49.5%. On top of that, employers and employees have social security contributions, which fund benefits like unemployment insurance and state pensions.

Employers are also responsible for paying schemes like the Work-Related Costs Scheme (WKR), which allows them to offer tax-free benefits like team outings that managers can offer, remote work allowances, or even a bicycle, within certain limits.

The 30% tax ruling remains in effect through 2025, but starting in 2027, it is reduced to 27%. This tax advantage allows eligible international employees to receive up to 30% of their gross salary tax-free until 2026, helping to offset relocation and living expenses.

Employers' cost and payroll components

While employees see the deductions on their pay slips, employers deal with a broader set of payroll costs managed by payroll software. This includes mandatory contributions to social security, unemployment insurance, healthcare funds, and occupational disability schemes, ensuring compliance with Dutch employment regulations and proper documentation of employee salaries. Pension is usually split between the employer and employee, depending on the collective agreement or sectoral rules.

Many companies also offer bonuses, performance-based pay, or non-cash benefits, using payroll software for accurate documentation. A car, for instance, comes with a taxable value that appears on the slips alongside the total salary. Remote work stipends, travel allowances, or gym memberships can also be included, depending on your budget and company culture.

All these components contribute to the final net salary, which is calculated and actually lands in an employee’s bank account after everything’s accounted for, providing employees with access to a clear overview.

What’s New in 2025?

A few key payroll changes came into effect in 2025. The minimum wage in the Netherlands now is €14.06 per hour for employees aged 21 and older, which affects not only wage calculations but also eligibility for certain benefits.

On the other hand, the Low Income Benefit (LIV), a financial incentive for employers hiring low-wage workers, has been abolished. The cap on transition payments (compensation for ending permanent contracts) has also been revised to ensure workers are fairly paid.

These changes may seem small individually, but together they shape how the payroll process is calculated, for example, what’s included on a payslip, and what employers need to watch out for.

Payroll for international workers and expats

If you’re an international employee in the Netherlands, the payroll process can come with a few added questions that determine the necessary compliance.

Highly skilled migrants must meet specific salary thresholds and may qualify for the 30% ruling. EU Blue Card holders and other residence permit holders have their own salary and reporting criteria.

One common challenge? Tax residency rules. Whether you're considered a tax resident can affect whether you're taxed on your worldwide income. Double taxation treaties also come into play when you live or work in multiple countries.

The bottom line is that payroll for internationals must be handled with care. Employers need to understand the visa implications, salary thresholds, and reporting requirements that determine what employees need to know about what they’re entitled to.

The Rise of Payroll Automation

Thankfully, most companies no longer run payroll by hand. Digital payroll administration software systems have become standard, and in 2025, automation is playing a key role in staying accurate and compliant.

Payroll software like DocSuite and Payslip helps companies generate pay slips and apply the right tax rates. They als help businesses stay compliant, save time, and reduce costly human errors.

For international businesses or growing startups, payroll software systems allow them to focus on scaling while ensuring their employees are paid fairly, correctly, and on time.

Final Thoughts

Payroll may not be glamorous, but it’s foundational. In a country like the Netherlands, payroll is a structure built to ensure fairness, accuracy, and clarity. Whether you’re a company looking to hire international talent in any form or an expat trying to make sense of the payroll process and your payroll payslip efficiently, understanding how the system works will give you access to a clear overview and serve you well.

And as we move further into 2025, generally keeping up with subject to legislative changes, requirements, and smart payroll tools that support clear communication will make a difference between chaos and clarity.