How long should an employer retain records of employment taxes

When you employ 1 or more employees then you must keep payroll records. These payroll records must meet specific conditions, in part to ensure that you can submit the correct information to the Tax and Customs Administration.

You may exercise your discretion in deciding the state in which you will keep your payroll records, unless you are a voluntary withholding agent: you must then keep payroll records in the Netherlands.

When you keep your payroll records in a state other than the Netherlands you must nevertheless offer the Tax and Customs Administration an opportunity to inspect your payroll records in the Netherlands.

Information you require for your payroll records

The Tax and Customs Administration assists you in the creation of your payroll records by sending some of the information you will need to you by post. This information includes:

• the 'Payroll tax return letter', which states the dates on which you must file a tax return
  You receive this letter in November of each year. More information is available under Tax return period.
• the decision stating the sector with which you are affiliated to enable you to apply the correct percentages for your sector
  You receive this decision when you register as an employer and when you submit notification of changes. More information is available under Sector affiliation.
• information about the employed persons' insurance contributions, such as the decision stating the percentage for the differentiated Return to Work Fund contribution
  You receive this decision in December of each year.

Keeping up-to-date wage statements

You create an annual wage statement for each employee before the payment of the first wages in that year. You keep up-to-date records of the employee and the employee's wages in the wage statement, including the employee's personal details, the application of the payroll tax reduction and the number of the income relationship.

When you use payroll records software the software will create the wage statements. You will need to provide for these wage statements if your payroll records are not fully automated or you do not contract out your payroll records. A model wage statement can be downloaded here (only available in Dutch). You may also use your own model for the wage statements, provided that the statements include at least the same information.

The wage statement consists of 2 parts:

• a part with sections for general information
  You use these sections to state the employee's details, your details and the data for the application of the table.
• 1 part with columns for specific data
  You use these columns to make entries of the relevant data each time you pay wages.

Automated payroll records

When you make use of automated payroll records then you must make records of all the employee data and make sure that these data can be furnished in the form of a complete wage statement at any required time.

Retention of secondment certificates

Have you seconded an employee to the Netherlands and does this employee live in another state? If so, the Tax and Customs Administration recommends that you make a copy of the original secondment certificate. This, with secondment within the EEA, is usually an A1/E101 certificate. The secondment certificate is issued by the social security authority of the state in which your employee is insured.

Payroll records audits

The Tax and Customs Administration must be able to audit your payroll records. Some schemes are governed by specific administrative obligations. You must also take account of the retention periods. More information can be obtained by calling the Tax Information Line.