Starting payroll administration: a complete guide for beginners

#1 Register with the tax authorities

The first step is to inform the Dutch Tax and Customs Administration when you officially become an employer. You can do this by completing and submitting the "request wage tax number" form.

After receiving your application, it typically takes 3 to 4 weeks to get a response. You'll receive:

• A letter with your wage tax number, indicating when you must start submitting payroll tax returns.
• A letter with your sector classification. Note: You won't receive this if you're a director-major shareholder (DGA) working at a private limited company (BV) or public limited company (NV).

Once you have this information, you can begin submitting payroll tax returns.

#2 Determine if a Collective Labour Agreement (CLA) applies

Is a CLA applicable to your organization? Usually, this is clear. For example, if you own a restaurant, the CLA of the Royal Dutch Hospitality Association applies. However, if you run a marketing or development agency, your organization falls under sector 44 or 45 (business services), and no CLA applies.

Sometimes, it's challenging to determine your sector. In such cases, it's best to consult a CLA specialist.

#3 Collect employee information

Ensure you accurately record all employee information in your payroll administration. At a minimum, you'll need:

• Full names
• Date of birth
• Email address and phone number (optional but useful)
• Bank account number
• Citizen service number (BSN)
• Wage tax credit: yes or no
• A copy of their ID

Additionally, you'll need a wage tax declaration, which you can easily request from the tax authorities.

#4 Determine the salary

The core of payroll processing is, of course, the salary. Be aware of different salary definitions: gross salary, net salary, all-in salary, etc.

We often advise agreeing on a gross salary excluding holiday allowance, as this is usually the simplest.

If no CLA applies, you're free to agree on any salary with your employee.

Tip: Always ensure you pay above the statutory minimum wage. If a CLA applies, you often must adhere to salary scales.

#5 Determine the number of vacation days

Every employee in the Netherlands is entitled to vacation days. The minimum is four times the weekly working hours per year. For a full-time employee, that's 20 vacation days annually.

You may grant more vacation days, but the number must be consistent for all employees in your organization.

To start your payroll administration, decide how many vacation days your employees will receive. Then, track their leave or hours taken. You can use an Excel sheet or, more conveniently, an online tool that allows easy approval of leave requests and automatic processing of hours.

#6 Holiday allowance: 8% or more?

In addition to vacation days, employees are entitled to holiday allowance, also known as vacation pay. The legal minimum is 8%, but you can offer more.

Decide whether to reserve the holiday allowance for payment in a fixed month (commonly May) or pay it out immediately. The latter is usually only done for on-call workers.

#7 Determine other allowances

You're almost there! Now, agree with your employee(s) on other allowances or bonuses, such as public transport reimbursement or performance bonuses.

Consider whether an allowance is taxable. For example, a €0.19 per km travel allowance for commuting is tax-free, but a bonus is usually considered taxable income (unless provided within the tax-free allowance space).

#8 Enter aata into payroll software

The final step is entering all data into payroll software. With smart online software, this is a breeze!

Need assistance getting started?

Need help starting your payroll administration? Our payroll experts are ready to answer your questions. Contact us at support@employes.nl

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