BDO is a global top-five accounting firm, with more than 2.000 skilledand experienced employees in the Netherlands.
If you come from abroad to (live and) work in the Netherlands, chances are that something will change in your social security position. Will you be covered by Dutch social security or will you stay covered by the social security scheme of your (former) state of residence? Will you be covered by both or none at all? In this article, we will explain some of the basics of social security in cross-border situations.
Regulation (EC) No 883 / 2004 on the coordination of social security systems
To avoid double social security coverage or no coverage at all, a regulation was introduced within the European Union. The regulation determines that persons, to whom the regulation applies, are subject to social security legislation of a single Member State only. In the case of cross-border working, it is important to determine your social security position, since it can also influence your family members’social security position.
General rule
For employees, the principle rule is that you are subject to social security legislation of the Member State where you exercise your employment. For example, an employee that exercises his employment in the Netherlands shall be subject to Dutch social security legislation. Based on Dutch legislation, national insurance and / or employee insurance contributions may be due in the Netherlands.
Specific rules apply to civil servants, a person receiving unemployment benefits, a person called up or recalled for services in the armed forces or civilian service, a person pursuing activities on board a vessel at sea and flight crew or cabin crew members. These exceptions will not be discussed in this article.
Secondment
Special rules apply to employees who are seconded by their employer from one Member State to another Member State. In principle, the secondee remains covered by the social security system of the sending state if:
- The employee is seconded by an employer that normally carries out its activities in the sending State;
- The anticipated duration of the secondment does not exceed 24 months; and
- The employee is not sent to replace another person;
For example
A company in Poland, specialised in software engineering, seconds one of their employees, Marek, to a group company in the Netherlands. He is expected to work on a project in the Netherlands for a period of 12 months. In this case, all of the abovementioned conditions are met, meaning the employee will stay covered by Polish social security while living and working in the Netherlands.
Activities in two or more Member States
A person who works as an employee in two or more countries shall be subject to the legislation of their state of residence, if the employee works at least 25% in their state of residence or earns at least 25% of their income in their state of residence. If this is not the case, the employee shall, in principle, be subject to the legislation of the country where the employer is situated if the employee only has one employer.
For example
Maria, who lives in Spain, works as a Sales Manager for a software company in the Netherlands. Maria primarily works in the Netherlands and Spain. She works for 2 days in a week in Spain and 3 days in the Netherlands. Since Maria works more than 25% in her state of residence (2 out of 5 days per week), she is subject to Spanish social security legislation. As of January 2020, Maria will only be working one day from Spain. This means Maria will be covered by Dutch social security as of January 2020.
Third-country nationals
The Netherlands also has bilateral treaties concerning social security with a couple of countries that are not a member of the EU or EEA. Please see the following website of the SVB for an overview of these countries. Each treaty contains specific rules regarding social security, which is why it is not possible to fully discuss these in this article.
A1-certificate / certificate of coverage
Based on the regulation or treaties, individuals can apply for an A1-certificate / certificate of coverage in their state of residence. An A1-certificate / certificate of coverage is evidence of your social security position, because it states in which country a person is covered for social security purposes and for which period. The certificate must be recognised by other countries, unless granted based on a false application.
If your family members do not generate their own income from professional activities, they will derive their social security benefits and cover from your social security position. However, if they start generating their own income, they must individually assess their situation.
It is not uncommon for an expatto come to the Netherlandswith a (dependent) partner on secondment and remaincovered by the home country social security system. If the partner, in the course of the assignment, secures a job in the Netherlands, he or she will become subject to the Dutch social security system and no longer be able to derive rights as a dependent.
The Netherlands
Dutch national law determines whether and to what extent a person is covered by the social security system in the Netherlands. In the Netherlands, social security is divided into two schemes: the national insurance scheme and the employee insurance scheme.
The national insurance schemes are: General Old Age Pensions Act (AOW), Surviving Dependents Act (Anw), Long-Term Care Act (Wlz) and Child Support (Kinderbijslag).
National insurances are due when you are:
- Considered a resident of the Netherlands; or
- Subject to payroll tax in the Netherlands in respect of employment that is carried out in the Netherlands.
National insurances are collected through the withholding of wage tax from the employee’s salary. For self-employed people, the contributions are collected via a personal income tax assessment, issued after the individual has filed their personal income tax return (due per April 1st, following the tax year concerned).
The employee insurances are: the Unemployment Insurance Act (WW), Work and Income Act (WIA), Sickness Benefits Act (ZW) and Invalidity Insurance Act (WAO). Employee insurances are due when a person is employedin the Netherlands. The premium for employee insurance is paid by the employer.
National- and employee insurances are also due when a treaty or a regulation of the European Union stipulates that Dutch social security legislation applies. Therefore, a person should always check which legislation is applicable, based on a treaty or regulation.
A separate category is the mandatory health cover (Zorgverzekeringswet or ‘Zvw’). By law, anyone covered by Long-term Care (Wlz), is covered by the Zvw. Everyone covered is required by law to take outat least a basic insurance policy for the Zvw. Often, in addition to the basic cover, additional cover is offered. For the insurance policy (and additional cover), a -modest- insurance premium is due.
The bulk of the Zvw is funded by contributions made by the employer for their employees. For self-employed people, retirees and some other specific groups, these contributions (at a reduced rate), are collected either through the withholding of old age benefitpaymentsor via an assessment (self-employed).
Check your social security position
Checking your social security position before you start working cross border (if possible) is crucial, as it could have a major impact. Some key points are:
- When treaties nor EU Regulations are applicable, Dutch social security legislation is applicable when working in the Netherlands, regardless of whether other social security legislation applies. This could mean double coverage or no coverage at all.
- Request for an A1 / certificate of coverage on time.
- Family members’ social security position can be affected.
Do you want to know more about moving to the Netherlands and how this will affect you financially and tax-wise? The BDO expat team has a wide knowledge regarding wage and income tax, social security and the 30% ruling. Please feel free to contact BDO for more information or fill in the form below.
FAQs
How much is social security in the Netherlands? ›
National insurance premium
The employer's social security contribution is 12.86% of the employee's salary.
The Dutch social security system has two strands. The first, national insurance (volksverzekeringen), covers social benefits and is administered by the Social Insurance Bank (Sociale Verzekeringsbank, or SVB). Meanwhile, employee insurance (werknemersverzekeringen) provides benefits relating to work.
Does the Netherlands have social security? ›If you live or work in the Netherlands you are insured for social security benefits. There are certain schemes under which you can receive money if you have little or no income. If you live abroad there are some situations in which you may still be insured for social security benefits.
Who pays social security in the Netherlands? ›Everyone who lives or works in the Netherlands is covered by the national insurance schemes for state pension (AOW) and surviving dependants (ANW). The contributions are withheld by the employer from employees' salaries and remitted to the Tax and Customs Administration.
Can US citizen retire to Netherlands? ›If you are not an EU citizen (or a citizen of the EEA or Switzerland) you will need to think much further ahead. After five years of legal residence in the Netherlands you can apply for a permanent residence permit which will also allow you to retire here.
What benefits do you get in Netherlands? ›[Updated Jan. 26, 2023] Mandatory employee benefits in the Netherlands include general old-age pension, surviving dependent's pension, long-term care, child support, unemployment, work, and income protection, sick leave, and health insurance.
Is Dutch social security taxable in the US? ›Dutch social security benefits (“AOW”) are taxable in the Netherlands only. If you are a resident of the United States, whether you are a U.S. citizen or not, and you receive Dutch social security benefits, you do not report them on your U.S. tax return.
How much is Dutch income tax? ›Tax brackets Netherlands
Tax brackets in the Netherlands vary depending on the type of income, box 1, 2 or 3. For box 1 tax (on income from employment, including home ownership), there is a 36.93% tax rate for income from € 0 - € 73,031. Above this, the tax rate is 49.5%.
If you want to stay in the Netherlands for longer than 90 days and you are not a national of an EU country, Liechtenstein, Norway, Iceland or Switzerland, you will need a residence permit. Often, you will also need an authorisation for temporary stay (MVV) to enter the Netherlands.
Are taxes high in the Netherlands? ›If you earn money while living in the Netherlands, you must pay taxes. The Netherlands is a socially conscious country, and higher earners can expect substantial taxation on their salary (up to 37%).
What is the retirement age in the Netherlands? ›
In 2023, the age of retirement is 66 years and 10 months. In 2022, the age of retirement is 66 years and 7 months. In 2021, the age of retirement is 66 years and 4 months. In 2020, the age of retirement was 66 years and 4 months.
Do US citizens pay taxes in the Netherlands? ›This means that you will be subject to tax in the Netherlands on your worldwide income. You will also be liable for social security contributions and healthcare insurance contributions. A taxpayer identification number will be assigned to you by the tax authorities once you have registered as a resident.
Do expats pay taxes in Netherlands? ›Whether you're a Dutch citizen or an expat, you are required to pay taxes if you earn money while living in the Netherlands.
What rights do Dutch citizens have? ›Rights of Dutch citizens
In the Netherlands all basic rights are laid down in the Constitution. Being a Dutch citizen means you can enter the Netherlands freely. Other rights that only apply to Dutch citizens are the right to vote and stand for election in parliamentary elections and the right to join the armed forces.
You do not need a visa, residence permit or work permit. You do, however, need a valid passport or identity document. You may also work in the Netherlands if you have a valid residence permit subject to temporary or non-temporary humanitarian grounds.
Can Americans have dual citizenship with Netherlands? ›Under the current Dutch Citizenship Act, you can keep dual nationality and multiple passports for as long as you live, provided you always carry a valid Dutch passport or identity card and do not voluntarily obtain another nationality.
Does the US allow dual citizenship with the Netherlands? ›Dual citizenship
those who acquire another citizenship at the time of birth (for example, a child born to Dutch parents in the United States would hold both US and Dutch citizenship). persons who acquire Dutch citizenship through the option procedure (including former Dutch citizens resuming citizenship)
In short, no, healthcare in the Netherlands is not free. Everyone who lives or works in the country must take out private health insurance.
What is the average income in the Netherlands? ›...
Average gross annual salary in the Netherlands in 2021, by province (in euros)
...
Housing.
Can a US citizen buy property in the Netherlands? ›
There are no restrictions placed on foreigners and non-Dutch residents buying property.
What countries do not tax US Social Security? ›- Australia.
- Austria.
- Belgium.
- Brazil.
- Canada.
- Chile.
- Czech Republic.
- Denmark.
If you are among the growing number of Americans who spend part of their career working outside the United States, both the United States and a foreign social security system cover your work. You would normally have to pay social security taxes to both countries for the same work.
What is the 30 rule in the Netherlands? ›The 30% facility is available to employees who are recruited from outside the Netherlands to work here temporarily. If they satisfy conditions for the 30% facility, they are exempt from paying tax on up to 30% of their salary.
How much do you need to live in Netherlands? ›Family of four estimated monthly costs are 3,320.2$ (3,137.2€) without rent. A single person estimated monthly costs are 947.6$ (895.4€) without rent. Cost of living in Netherlands is, on average, 7.6% lower than in United States. Rent in Netherlands is, on average, 29.3% lower than in United States.
How is property taxed in Netherlands? ›Do you own a (holiday) house or flat in the Netherlands? If so, you must pay onroerendezaakbelasting– OZB (property tax) on it every year. Property tax is part of the gemeentelijke belastingen (municipal taxes) and is billed by your municipality. The municipality sets the amount.
What are the downsides of living in the Netherlands? ›- High Taxes. The tax rates in the Netherlands are incredibly high as a single worker is taxed at 36.1%. ...
- A Sense of Racism. Unfortunately, racism is much alive in the Netherlands. ...
- Housing Crisis. ...
- Periodical Bad Weather. ...
- Language Barrier. ...
- High Cost of Living. ...
- Strict Rules. ...
- Customer Service Upsets.
Overall, your income must be equal to, or higher than, the Dutch minimum wage. As of January 2022, the Dutch minimum wage is €1,725 per month. However, if your income is below this level, you'll need to provide evidence that you'll have enough cash to live on.
How many Americans live in Netherlands? ›There are an estimated 35,000 Americans living in the Netherlands. The Netherlands is an exhilarating destination for Americans living abroad.
Is food taxed in Netherlands? ›9% tariff. The 9% tariff is also called the low tariff. This tariff is applied to many common products or services, such as food and drink, agricultural products and services, medicines, books, daily newspapers and magazines.
Is it better to live in the Netherlands? ›
People tend to work fewer hours here than in other countries and value home time as much as work time. The pay and, therefore, the standard of living tend to be better. In fact, the work-life balance in the Netherlands is among the best in the world!
Is Netherlands cost of living high? ›What is the average cost of living in Netherlands? Ans. The average cost of living in the Netherlands is 204.99% high. A single person living in the country can expect to spend around 863.56 EUR (INR 72,500) without rent.
Which European country has the lowest retirement age? ›Current retirement ages (2020*)
The current retirement age is 65 years or over in most European countries where OECD data is available. Of the EU member states, Greece, Italy, Luxembourg and Slovenia have the lowest current retirement ages, with 62 years for both men and women.
No AOW pension
If you live and work outside the Netherlands, you are usually no longer insured under the AOW pension scheme. Instead of the AOW pension, you may be able to build up a pension in the country where you live or work.
If you want to stay in the Netherlands for longer than 90 days, you may need a residence permit. In many cases you will also have to apply for a long-stay visa before you travel to the Netherlands. This visa is also called an authorisation for temporary stay (MVV).
Why is the Netherlands considered a tax haven? ›The Netherlands has a large network of tax treaties, a low corporate income tax rate and a full participation exemption for capital gains and profits. These characteristics, in addition to a favorable tax environment, make Netherlands one of the most open economies in the world for multinational corporations (MNCs).
How much does it cost to live in the Netherlands in US dollars? ›| Cost | Amsterdam | The Hague |
|---|---|---|
| Renting 1 bedroom (per month) | $1,513 (USD) | $915 (USD) |
| Renting 3 bedrooms (per month) | $2,465 (USD) | $1,568 (USD) |
| Buying (per square foot) | $628 (USD) | $307 (USD) |
Yes, if you are a U.S. citizen or a resident alien living outside the United States, your worldwide income is subject to U.S. income tax, regardless of where you live.
Which European country has lowest taxes for expats? ›Bulgaria. With a flat rate of just 10%, Bulgaria's income tax is one of the lowest in Europe. It is not only attractive to those looking to keep more of their earnings, but also to expats looking for great quality of life.
How much are taxes in the Netherlands compared to the US? ›Again according to the OECD, the country with the highest national income tax rate is the Netherlands at 52 percent, more than 12 percentage points higher than the U.S. top federal individual income rate of 39.6 percent.
What is 30% ruling Netherlands 2023? ›
For everyone who has the 30% ruling or would like to get it: note that for 2023 the minimum salary to qualify for the 30% ruling has been raised from EUR 39.467 to EUR 41.954. (And for under 30 year olds with a Dutch masters' degree or equivalent: from EUR 30.001 to EUR 31.891.)
Is there free speech in Netherlands? ›The Netherlands guarantees freedom of expression, which is laid down in Article 7 of the Dutch Constitution. This freedom is not absolute, which means that it is subject to certain limitations. This is because Article 7 of the Constitution can sometimes clash with Article 1.
What are some controversial Dutch laws? ›It is against Dutch law to urinate in a canal – but acceptable if you are pregnant. > It's illegal to smoke tobacco in all public places but not cannabis. This became a confusing matter when police fined a man for smoking a mixture of both in a coffeehouse, with the penalty laid down for the tobacco part.
How is freedom in Netherlands? ›Freedom. The Netherlands combats human rights violations and promotes freedom of expression, freedom of religion and belief, and internet freedom. Discrimination on the grounds of religion, belief, political opinion, race or sex or on any other grounds is not permitted.
How much is the pension in the Netherlands? ›The statutory pension age is gradually increasing to 67 in 2021. Thereafter, the standard retirement age will be linked to gains in life expectancy. The basic pension benefit for a single person equalled EUR 1 173.33 per month in 2018. There is an addition holiday allowance of EUR 71.42 per person.
How much pension is paid in Netherlands? ›The state or AOW pension (basispensioen) is paid from the age of 66 and provides basic benefit payments of up to 70 percent of the minimum net wage.
What is the pension in the Netherlands? ›The AOW pension is a basic state pension provided by the Dutch government to people who have reached AOW pension age. AOW is short for Algemene Ouderdomswet, the National Old Age Pensions Act. You will receive it if you have been insured under the Dutch AOW pension scheme.
How much is the basic salary in Netherlands? ›| Age | Per month | Per week |
|---|---|---|
| 21 year and older | € 1.934,40 | € 446,40 |
| 20 year | € 1.547,50 | € 357,10 |
| 19 year | € 1.160,65 | € 267,85 |
| 18 year | € 967,20 | € 223,20 |
In 2021 the statutory retirement age is 66 years and 4 months. In 2022 it will increase to 66 years and 7 months; in 2023 to 66 years and 10 months; in 2024 to 67 years. As from 2025 the pension age will be linked to the average life expectancy and thus could be greater than 67.
What is the mandatory retirement age in the Netherlands? ›Old Age Pension (AOW)
Everyone who resides or works in the Netherlands builds up this pension over the years. The state pension age (AOW age) is gradually changing, until it reaches 67 years in 2024. In 2028 the state pension age will be raised again, to 67 years and 3 months.
Is Dutch Social Security taxable in the US? ›
If you are covered under the Dutch system, you and your employer (if you are an employee) must pay Dutch social security taxes. If you are self-employed and reside in the United States or the Netherlands, you will generally be covered and taxed only by the country where you reside.
Why is the Dutch pension system good? ›A strong feature of the Dutch pension system is the combination of pay-as-you-go funding for the state pension ('AOW') as the first pillar, and capital funding for the occupational pension as the second pillar.
What percentage of salary goes to pension in Netherlands? ›For each year you live or work in the Netherlands, you build 2% towards your state pension. To receive the full pension (100%), you must have 50 years of contributions.
Do you pay tax on pension in Netherlands? ›Public Pensions
Benefits are adjusted according to changes in the minimum wage and are subject to income tax. A full old-age pension is paid to those who have resided for 50 years in the Netherlands between the ages of 15 and 65.
What happens to my State Pension if I move abroad? As long as you've paid enough National Insurance, you can claim your State Pension while living abroad. The main difference is that if the State Pension increases, you may not benefit from the extra amount if you're living in certain countries.
Is Netherlands cheap to live? ›...
Housing.
Full-time work in the Netherlands
A standard Dutch working week is 38 hours. The majority of fulltime (voltijd) jobs in the Netherlands are between 36-40 hours a week, or seven to eight hours a day, five days a week.
| Taxable income band EUR | Tax rates for box 1 income |
|---|---|
| 1 to 34,712 | 9.7% |
| 34,713 to 68,507 | 37.35% |
| 68,508+ | 49.5% |