A new job! How do you calculate your net salary?

Are you in the running for a new job? Exciting! Now, you’d like to calculate your net earnings based on your gross salary. Your net salary is the amount that enters your bank account at the end of every month. What factors have the greatest effect on your net salary? And how can you calculate your net earnings? You can find out in this article.

What is your gross salary?

Your gross salary is your salary prior to the deduction of taxes and contributions. Your net salary is what you get after the deduction of taxes and contributions. In other words, your gross salary is higher than your net salary. So, don’t think that you’re suddenly rich when you see your salary offer. Even though that might seem harsh, you actually get a lot in return. For example, if you were to lose your job, become incapacitated or fall ill, you’d get financial help from the government. And your monthly pension contributions will also eventually come back to you.

Why is there this difference between gross and net salary?

Job adverts, employment contracts and collective agreements always specify the gross salary. That’s because the net salary paid into your account every month depends on employment-related expenses like income tax and contributions. Your age also affects your eventual earnings, as do your negotiation skills. In a nutshell: your net salary can end up being different to that of a colleague who earns the same gross salary. That is why the gross salary is the one that’s always specified.

Calculating your net salary: what's deducted from your gross salary?

Want to calculate the net salary relevant to your situation? Then you must deduct various taxes and contributions from your gross salary. Let’s take a detailed look at the taxes and contributions that your employer will be deducting from your gross salary.

Income tax

Income tax is a tax that your employer deducts from your salary. Your employer subsequently hands over this tax to the revenue service in the form of a payroll tax. The level of income tax depends on the level of your gross salary. For income up to €68,507, the tax rate is 37.35%. Any income above €68,507 is taxed at 49.50%.

Because income tax is deducted every month, there’s a good chance that you won’t have to pay any additional income tax at the end of the calendar year. But what if you have multiple sources of income, perhaps because you have more than one job or have your own business in addition to being employed? Then you might be entitled to tax deductions and tax credits (discounts on your income tax). Yes, it’s quite complicated. Read more about deductions and credits at belastingdienst.nl, where you can also check whether you’re entitled to tax credits.

National insurance

National insurance must be paid by everyone who lives and works in the Netherlands, as well as everyone who works for a company based in the Netherlands. National insurance is social insurance that provides protection against the financial consequences of retirement, illness, disability, death or parenthood. There are four types of national insurance in the Netherlands: AOW (General Old Age Pensions Act), Wlz (Long-term Care Act), ANW (General Surviving Relatives Act) and the AKW (General Child Benefit Act). No contributions are payable to the AKW.

Employment insurance contributions

Employment insurance provides protection against loss of income resulting from job loss, incapacitation or illness. The relevant laws are the WW (Unemployment Insurance Act), the WAO (Disability Insurance Act), the WIA (Work and Income (Capacity for Work) Act) and the ZW (Sickness Benefits Act). You will pay these contributions if you’re younger than the age specified by the AOW and earn a salary or claim benefits.

ZVW (Healthcare Insurance) contributions

Your employer will usually pay the ZVW employer tax, based on your salary. But the employer will not pay it in certain cases. This depends on your social status. You will, for example, pay your own ZVW contributions if you’re responsible for alimony payments. In that case, you’ll receive a ZVW assessment or provisional assessment. The Revenue Service will deduct your contribution from your net salary.

Salary and remuneration

€2.700,00

Bonus

€200,00

Gross salary

€2.900,00

Income tax (€2.811,73)

- €540,33

Pension contribution (5,18%)

- €88,27

Net salary payable

€2.271,40

What about holiday allowances and year-end bonuses?

Your gross salary excludes the holiday allowance paid annually to you, usually at the end of May. The holiday allowance calculation is based on the salary amount paid to you from 1 June of the previous year to 1 June of the current year. From your new employer, you might also receive a year-end bonus or a 13th month salary. A year-end bonus amounts to a fixed percentage of your gross salary. A 13th month salary amounts to an additional month’s gross salary. The year-end bonus often depends on how much profit has been generated by the company. Some employers agree on a ‘baseline’ with their employees. This is a minimum fixed amount that you will receive as an employee.

Company vehicle

You might be given the use of a company vehicle. That may seem rather attractive. But take note: if you use it for private trips (at least 500 km per year), you’ll pay tax on it. This tax will be deducted from your salary on a monthly basis. A company vehicle will therefore affect your net salary. The amount of tax that you’ll pay will depend on the list price of the vehicle. This is because the additional tax liability is a percentage of the list price. Whether you choose an internal combustion or zero-emission vehicle (electric or hydrogen) also makes quite a difference.

The additional tax liability percentages change every year. In 2022, the additional tax liability on internal combustion vehicles will be 22%. If you choose an electric vehicle, your 2022 additional tax liability will be 16% up to a list price of €35,000 and 22% if the list price is higher. In 2023, this list price will drop to €30,000.

Do you travel to and from work with your own vehicle or using public transport? Then your employer can award you tax-free compensation, amounting to €0.19 per kilometre or more. You’ll receive this travel expense reimbursement on a monthly basis as an addition to your net salary.

Netherland's gross/net salary calculator

Want to quickly know what the difference between your gross salary and net salary will be in your situation? Then use the Netherlands gross/net salary calculator at nationaleberoepengids.nl. When calculating your salary in the Netherlands (gross vs net), this tool takes into account all the important details. Within a minute, you’ll know how much money will enter your bank account every month.

Is your salary competitive?

Are you wondering how other salaries compare and whether your salary is competitive? Then check out our salary comparison tool. Simply enter your job description, your industry and your gross annual salary. The tool will instantly show you how your salary compares to the average salary. This is especially useful if you want to be well prepared for salary negotiations!