What is the difference between your gross and net salary?
to April 20, 2022
Your employment contract or collective labor agreement often states the wage you receive for your work. Usually this is your gross salary. What you actually get deposited into your account is less. This is due to the premiums and contributions that are still deducted from your gross salary. In this blog we look at the difference between your gross and net salary. What exactly is deducted from your gross salary, and why?
1. Payroll tax
Everyone who works as an employee pays payroll tax. How much, that depends on your salary. Your employer withholds the payroll tax from your gross salary and one-off rewards, such as a bonus, holiday allowance or year-end bonus. This amount goes directly to the tax authorities. Payroll tax consists of payroll tax and premiums for:
- General Old Age Pensions Act (AOW)
- Long-term Care Act (Wlz)
- General Surviving Dependents Act (Anw)
- General Child Benefit Act (AKW)
Thanks to the payroll tax credit, you can get a discount on your payroll tax, which means that you have more left over. Please note: this is possible with one employer or benefits agency at a time.
2. Social contributions
Your employer pays even more premiums for you to the tax authorities. These are for social insurance: Work and Income according to Labor Capacity Act (WIA), Unemployment Insurance Act (WW) and Sickness Benefits Act (ZW). If you become incapacitated for work, unemployed or ill, you can claim benefits.
3. Pension premium
Do you have a pension scheme through your work? In that case, your employer and you often pay the premium together. Your employer can deduct your part of the amount from your salary and transfer this together with his part to the pension fund or the pension insurer.
4. Health insurance contribution
Your employer often deducts a contribution for the Health Insurance Act (Zvw) from your gross salary. This contribution is income-related: the higher your income, the higher the contribution.
The amount of your gross salary and what is deducted from it can be found on your pay slip or annual statement. At the bottom you will find your net salary: this is what is left in the end and what your employer deposits into your account. The gross-net calculation can be different for everyone.
What else is on your pay slip, and why your net salary in 2022 is different from last year? You read that in this blog.
More or less net salary
Sometimes your employer can also deduct something from your net salary. For example, if you have had a traffic fine with a company car or if you owe a contribution to the staff association. There can also be more net. For example, if you have advanced costs for your employer or are allowed to declare travel costs for your business trips or commuting.
Want to know more?
Do you have questions about your salary, your pay slip or do you suspect that something is wrong with your gross-net calculation? Contact us! Our Service Center is available every working day from 8.00 am to 18.00 pm via email@example.com and 0345 851 963.