As of January 1, 2019 employer must apply the highest tax rate of 52% in the Dutch payroll if the correct address of their foreign employees is not recorded properly.
Next to the highest wage tax rate, instead of the lower average wage tax rates, the following applies as well in the payroll:
- No payroll tax credit is allowed.
- Employer’s social security contributions must be calculated on the full salary instead of the maximum amounts set.
- The employee’s part of the health insurance must be calculated on the full salary instead of the maximum amount set.
- Employer’s part of the health insurance must also be calculated on the full salary instead of the maximum amount set.
Retroactive adjustments are not allowed in the payroll for example if the employee has provided the correct address details at a later stage.
The above impact both the company and the employee financially.
Therefore it is of outmost import to obtain and record all payroll data, including wage tax declaration and copy of valid identity card before the 1st working day in the Netherlands.