To summarize numerous previous articles: Dutch payroll is complex and can be very difficult to understand. Most employees, contractors or freelancers only verify their salary through their bank account and pay little attention to any specific payroll specifications that describe their salary calculations. The document is, to put it mildly, complicated and without the correct guidance or knowledge it is possible to enter a seemingly endless loop of re-correction.
This makes the Dutch payroll sound incredibly multifaceted; however, the mystical aura and reputation that complexity receives are not always necessarily true.
The main question usually asked is “Can Dutch payroll administration be straightforward and simple?” The answer is yes and no, as the process seems relatively simple when compared to logistics as a whole. You need a record for each individual employee that contains vital information, such as social security numbers and salary amount. Taking this information together with overtime, travel allowances and similar variables, payroll tax and insurance contributions and take home pay can be calculated and then paid. Calculated taxes and contributions must also be reported and paid to the appropriate tax department.
That’s fair. The payroll specification is not completely impossible to understand, but it will take time – a lot!
So why all the fuss? Well, while it is certainly possible to learn the Dutch payroll process, the legislation surrounding the payroll process itself is dynamic, complicated, multi-layered, and constantly changing. In the Netherlands, each component of the payroll must be examined for the base calculation and to distinguish the contribution to be made by the employee. With the rules changing so frequently, it is incredibly difficult to keep up with, much less master, the administrative tasks related to Dutch payroll. Robust, complex and expensive software is also required.
Collective bargaining agreements are also vital (documents describing employee earnings and allowances, which can be more than 150 pages long). This large amount of important information makes any task incredibly difficult and time-consuming, especially if the task requires numerous employees at multiple companies to be paid at the same time.
The Dutch authorities have been trying to simplify payroll for a long time. However, there has been no immediate success for many years. While plans are constantly on the horizon, the political process is lengthy and extremely slow. Agreements on collective calculations of labor contributions and pensions are also difficult to understand and implement. Although negotiations continue between employers and employees, these complications are unlikely to go away anytime soon.
