Some Information on Salary in The Netherlands.
As the economy in The Netherlands strengthens and consumer confidence increases we expect that this will influence hiring decisions positively.
As part of this multiplier effect, we expect to see increases in available job positions and even the creation of new openings. This will mean new jobs for job seekers and increased growth opportunities for employees.
There are exciting times ahead and it does pay to get more familiar with salaries, pay structures and allowances.
So let’s talk for a bit about salary in The Netherlands. What is the difference between the gross and net income? What pay components should you look out for before signing your employment contract?
In this blog post we provide you with a few useful hints you might want to consider when entering into salary negotiations with a prospective employer. It is interesting to note that The NL pays the 3rd highest minimum wage in Europe. From 2013, the minimum wage has been Eur 1469.40 gross. This means that if you live in The Netherlands, you are in a prime location. Wouldn’t it would be great thing, if you could take advantage of that?
According to the Dutch bureau of statistics, sector does play a role in salary differentials. The highest salaries are earned in the mining industry, electrical, and gas supply, and financial institutions. Service industries, agriculture and business support functions earn the lowest average salaries. There is also research to show that Education also plays quite an important role with regards to pay in The Netherlands. The Table below from The Holland Alumni Network gives an overview of the average annual salary ranges for different degree types and it is quite useful as a benchmark for future salary discussions.
Degree type
| Bachelor degree | €24,000- €35,000 |
| Master of Science (MS) | €26,000 - €48,000 |
| Master of Business Administration (MBA) | €30,000 - €60,000 |
| Doctorate (PhD) | €32,000 - €60,000 |
In the Netherlands, salaries are usually communicated in the gross format and taxed in a progressive format. This means that the salary you will see on your employment letter is most likely the gross. Also there are tax brackets or ranges with differing tax rates and these rates increase in proportion to your earnings. The implication of this is that the more you earn, the more taxes you will pay. With a salary of about 3000 euro gross you would have to pay approximately 35% to get your net salary. Please see below for more details on the tax rates in The Netherlands.
For employees aged 65 and below:
37% on the first 19.645 Euros
42% on the next 13.718 Euros
42% on the next 22.628 Euros
52% from 55.992 Euros and upwards.
Tax contribution in the Netherlands is deducted from source, and therefore it is very advisable to factor that into discussions on remunerations and in all salary negotiations. This will avoid any unwelcome surprises in the future.
There are some key considerations to make during salary negotiations. If you are provided with an annual Salary figure, it is always worth checking to confirm whether the amount includes the 8% holiday pay or the 13th and 14th month salaries as these amounts can make a considerable difference to your net income.
- Remember to check beforehand how much your net will be as salary negotiations are usually done on the gross.
- Ascertain the components of the salary package does it include 8% of holiday allowance. This 8% is usually applied to your basic salary X 12months and paid to you as a vacation allowance. Also confirm if it includes the 13th month salary usually discretionary and paid towards employee Christmas expenses.
- If you are a migrant knowledge worker with a minimum of 24 months working experience you will be applicable for the 30% ruling. In this scenario 30% of your income is not taxed leaving with you with only 70% taxable income. This ruling is sometimes referred to as 14th month salary.
- The reimbursement of transportation expenses should be considered and some companies may agree to provide support in this regard such that a portion of your income will not be taxed and will be set aside to help to you cover transportation costs.
- Travelling allowance if your job requires some travelling, you might want to discuss the provision of a travel allowance as a separate payment or a reimbursable amount. A word of caution though, most employers might prefer that you relocate rather than commute.
Together abroad offers career advice for expatriate workers who would like to work in The Hague. Please feel free to contact us for advice on salary negotiations and employment contracts.
By: Tamkara Adun