Dutch payslip explained: how to read each line

What is on a payslip?

You read a payslip from top to bottom: first what you earn, then what is deducted, and at the bottom what you receive.

• Gross pay: the salary under the contract, plus allowances, for example for overtime or irregular hours.
• Deductions: the wage tax and, for example, the employee share of the pension premium.
• Net pay: what lands in the bank account.
• Reservations: what you build up for later, such as holiday allowance.

The payslip also shows details such as the name, the job, the pay period, the hourly or monthly wage and whether the payroll tax credit is applied.

How is net pay calculated?

Net pay is gross pay minus the deductions. How much wage tax is deducted depends on the wage and on the payroll tax credit (loonheffingskorting).

The payroll tax credit reduces the wage tax. You may only have it applied by one employer at a time. If you work for two employers, usually choose the job with the highest wage; at the other job more wage tax is deducted.

Holiday allowance and bonuses are taxed at the special rate. That is why a different share is deducted from a bonus or from the holiday allowance than from ordinary pay.

What are the deductions?

The deductions are the amounts taken off gross pay:

• Wage tax: income tax and national insurance contributions, such as the state pension (AOW). The employer withholds it and pays it to the tax authority.
• Pension premium: the employee share, if the employer has a pension scheme.
• Other deductions: for example a contribution to a collective insurance.

The employee insurance premiums, such as unemployment insurance (WW), and the employer's healthcare levy (Zvw) are paid by the employer. They sometimes appear on the payslip, but are not deducted from pay.

Add up the deductions: gross minus that total should be net. If it does not match, ask the employer.

Why are there reservations on it?

A reservation is money you earn now but receive later. The best-known example is holiday allowance: by law at least 8% of gross pay. It is usually reserved every month and paid at least once a year, usually in May or June.

The payslip shows what is added each month and often the total built up so far. Sometimes holiday hours or a thirteenth month appear as well. The collective labour agreement or the contract may contain other arrangements, for example a higher percentage or monthly payment.

When do I get my payslip?

The employer must provide a payslip with the first wage payment and after that whenever something changes, for example in hours, salary or allowances. Many employers provide a payslip every month, even when nothing changes.

A payslip may be digital, for example in an app or a portal. Keep your payslips: you need them for a mortgage or your tax return, for example.

Example: 't Groene Hart

Garden business 't Groene Hart has three employees. Employee Sanne receives a payslip in March. The amounts are round example figures, not the outcome of the wage tax tables.

• Gross pay: €2,500
• Wage tax, with payroll tax credit: − €250
• Employee pension premium: − €100
• Net pay: €2,500 − €250 − €100 = €2,150
• Holiday allowance reservation, 8% of €2,500: €200, paid in May

Before payment, the owner checks whether the difference between gross and net equals the total of the deductions, and whether the hours and allowances match the schedule.

How it works in Nexora

In Nexora you create payslips in the Payroll module. Contracts come from HR and hours worked from the planning, so you enter nothing twice.

• Trial payroll: the whole run is calculated in advance and compared with the previous one, so you see deviations before you release it.
• Release: a person releases the run. The payments, the journal entry and the payroll tax return then come from the same run.
• Payslips: after release they are in My Nexora and in each employee's app, with the annual statements.

Read more about Payroll in Nexora.