Understanding Dutch Payroll

EAFS consulting BV are a Dutch Payroll consultancy for contractors.

Each country has its own unique spin on payroll, social security and income taxation. The Dutch market is no exception, with the documentation and procedures often being complicated and time consuming.

The Dutch tax authorities ruled in 1997 that any foreign company directing employees or contractors to an assignment within The Netherlands are seen as having ‘fictitious residence’ for tax purposes. What this means is that any employee on placement or assignment in Holland or The Netherlands are subject to Dutch income tax, right from the first working day. This requires the foreign company in question to set up a payroll administration and ensure the correct tax and social security are paid every month.

If the company doesn’t undertake these requirements for the certain individual then the client responsible for the employees in The Netherlands is held liable for any tax debt incurred. The consequences can be large and costly.

Euro Consulting BV are specialists in dealing with Dutch Payroll and can assist in all stages of procedures to safeguard legal compliancy and warrant money saving within Dutch law.

Rules around Dutch Payroll Administration


It is imperative that the identity of each individual employee is established before making them available to the Dutch labour market. It is also heavily recommended that the employees’ identity is established before the beginning of their start in the Netherlands. This can be in the form of a valid identity card, such as a passport, an EU Identity card, EEA or EU residence documents I – IV or a refugee passport.

It is advisable to note that establishing an identity from a driving license alone is forbidden. Furthermore, if an identity cannot be established in the accepted manners then a higher wage tax will be withheld.

Dutch SOFI Number

The Tax and Customs Authorities assign each individual taxpayer an individual Social and Fiscal Number – also known as a SOFI Number.

A person who doesn’t live in the Netherlands is still taxable by the Dutch Government if they work within the country’s borders and, therefore, they have to apply for a SOFI number also. There are various tax offices that can deal with applications, ranging from the ‘Alkmaar’ office to the ‘Zwolle’ office.

When applying for a SOFI number, the applicant must submit an identity card with validity. Accepted forms of ID include a passport, EU Identity Card or a national identity card from a country within Europe.

Please be advised that a driving licence will not be accepted as a valid ID card.

Individuals who don’t come from a country within the European Union or the EEA (Liechtenstein, Iceland, Norway or Switzerland) should hold a valid residency permit containing a statement highlighting that they are permitted to work alongside a valid work permit. These should be submitted when applying for a SOFI number. Douglas Mcgregor

In : Taxes

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