Administrative obligations for the withholding agent in the Netherlands

The withholding agent in the Netherlands has several administrative obligations. The withholding agent needs to keep all information concerning the employee. Part of the information is included in the payroll (or wage) statement, which needs to be filed for every employment relationship. Other information is kept with the payroll administration. Also, the withholding agent must provide the employee with a pay slip and annual statement at the end of the year.

 Payroll statement

In the payroll statement, the withholding agent keeps details of the employee and his wages, such as personal data, the application of the wage tax credit, and the income relationship number (usually to specify the type of income). If the employee has more than one (1) employment with withholding agent (the employer), the employer must submit a payroll statement for each employment. The payroll statement is filed before the first wage payment. The software will prepare the payroll statement if a third-party payroll software package is used. The withholding agent will need to draft a payroll statement for each employee or benefit recipient in fictitious employment.

 Other information

In addition to the payroll statement, the withholding agent must record all information regarding the employee relevant for a possible wage tax audit by the Dutch tax authorities. This may include the following:

• Employment contract;
• Wage tax statement (declaration of data for wage tax withholdings);
• Copy of the identity document;
• Leave and sick leave administration;
• Target group statements;
• Apprenticeship contracts under a vocational training scheme.

Suppose any employee is working on a secondment contract with a foreign company. In that case, keeping a copy of the secondment and the social security statement (A1 or Certificate of Coverage) is highly recommended.  

Furthermore, it is recommended that the withholding agent keeps with the payroll administration the calculations that show the reconciliation between the Dutch wage tax returns and the accounting records. 

Special administrative requirements

Special administrative obligations apply to:

• Exempt payments and benefits in kind;
• Wage components subject to final taxation;
• Orders, statements, and other official documents;
• Tax deductions;
• Allowances, benefits in kind, and provisions for transport.