If you have recently started working in the Netherlands, your first payslip (loonstrookje) might look like a puzzle. Dutch payroll involves several layers of taxation and social contributions, each with its own rules and rates. This guide explains every major deduction you will see.
Loonheffing: The Combined Withholding
The term loonheffing refers to the combined withholding of income tax (loonbelasting) and national insurance contributions (premies volksverzekeringen). Your employer calculates and withholds this amount from your gross salary each month.
The volksverzekeringen component covers three national insurance schemes:
- AOW (Algemene Ouderdomswet): The state pension, at 17.90%. This provides a basic pension from age 67.
- Anw (Algemene nabestaandenwet): Survivor's benefit at 0.10%, providing income for surviving partners.
- Wlz (Wet langdurige zorg): Long-term care insurance at 9.99%, covering nursing home and home care costs.
These premiums are only charged on income in the first tax bracket (up to approximately 38,441 euros). The combined rate of 27.99% is included in the 36.97% first bracket rate you see quoted.
ZVW: Healthcare Insurance Contribution
The Zorgverzekeringswet (ZVW) contribution is the employer's healthcare insurance premium. Your employer pays 6.5% of your gross salary (up to a maximum income of 71,628 euros) to help fund the healthcare system. This amount appears on your payslip as a taxable benefit — it increases your taxable income but you do not actually receive it as cash.
In addition, every resident must take out a basic health insurance policy (basisverzekering) from a private insurer, costing approximately 130-170 euros per month. This is paid separately and is not a payroll deduction.
Werknemersverzekeringen: Employee Insurance
Employers also pay werknemersverzekeringen (employee insurance premiums) on your behalf. These are entirely employer-funded and do not appear as deductions on your payslip, but they do affect the total cost of employing you:
- WW (Werkloosheidswet): Unemployment insurance, at 2.64% (low rate for permanent contracts) or 7.64% (high rate for flexible contracts).
- WIA/WAO (Arbeidsongeschiktheid): Disability insurance, approximately 7.11%.
- ZW (Ziektewet): Sickness benefit, approximately 1-3% depending on the sector.
Pension Contributions
Many Dutch employers participate in a pension fund (pensioenfonds). Pension contributions are split between employer and employee, with the employee's share typically deducted from gross salary before tax. This reduces your taxable income, making pension contributions tax-efficient.
Reading Your Payslip
A typical Dutch payslip will show:
- Brutoloon (gross salary)
- Pensioenpremie (pension contribution — employee share)
- Loonheffing (combined income tax and social security)
- Nettoloon (net salary — the amount deposited in your bank account)
- Reservering vakantiegeld (holiday allowance accrual)
Use our Netherlands salary calculator to estimate your net pay based on your gross salary.