Gross Vs. Net Pay: What Is the Difference?

Salaries are often considered a main selling point for talent recruitment. Companies with a clear vision, great business practices, a variety of benefits, and high compensation will have an amazing pool of candidates from which to fill their positions. But what does a $95,000 salary mean in terms of take-home pay? The answers vary by country.

Your paychecks refer to both gross and net pay, but only one reflects the tangible money you can deposit into your bank account. In the US, the UK, and in Europe, the difference of gross versus net pay is based on a variety of factors. Let’s break down what gross and net pay mean, and the greatest differences between the two.

What do gross and net pay mean for a specific pay period? Which represents a true salary? How do deductions factor into a salary?

What is Gross Pay?

Essentially, gross pay is the biweekly or monthly pay period cumulative pay you earn. Cumulatively, it equals the salary offered with a position. Gross pay is listed on a paycheck and reflects the money earned before taxes and any other fees are deducted. 

Human resources professionals can determine what salaries are allowed in your budget, and what would be commensurate compensation for specific positions. 

If your HR provider has consulted you and offered a job to a final candidate and the candidate accepts, they will sign an employment contract with a listed salary. For example, if someone accepts an offer for $85,000 per year, this is considered their gross pay.

What is Net Pay?

Net pay represents the money you actually earn on your paycheck. In the US, deductions like federal and state taxes, social security, and 401k are taken directly from your paycheck. In the UK, benefits like National Insurance payments are made from your gross pay amount, and are not included in the net paycheck you take home.

In European countries (including countries in the EU), the amount of net pay you receive depends on the tax rates and laws in place. Payroll taxes may include educational and training costs, national taxes, and social contributions.

In some EU countries, you may take home a greater net pay (on the same gross pay) after deductions. For example, in Denmark, income tax rates are 55.9%, while in Hungary, the taxes on income stand at 15%. Thus, you may earn the same gross pay in both countries, but you’ll take home far less net pay in Denmark.

Which type of pay reflects your true salary?

This gets a bit murky — both gross and net pay reflect your true salary. The deductions taken from your gross pay go toward your mandated taxes and pay into benefits like health insurance and retirement funds, Thus, while you may not have control over that portion of your salary, it still pours contributions into benefit programs for you.

However, your net pay is the money that you control: you can direct how it’s spent and it’s reflected in your bank account. On HR job postings that include salary, the annual pay listed equals your gross pay per paycheck added up. When salaries are discussed in public forums, etc., the amounts refer to cumulative gross pay and not to net pay.

How to calculate gross vs. net pay

You can calculate gross vs net pay based on the tax and other deduction laws of the region. It’s important to utilize HR professionals with a thorough understanding of  income tax and deductions in the countries where you operate.

For example, if your business is based in the US and you’re looking to expand to France, the salary and deductions for an identical position will be extremely different in each country.

Ways to calculate gross vs net pay include:

  • Dividing annual salary into pay periods. This should equal the gross pay listed on each paycheck.
  • For those who earn hourly wages rather than salaried wages, the amount of hours worked multiplied by the hourly rate will equal gross pay.
  • Determine the mandated deductions on each paycheck and subtract these from the gross pay total. This number equals the net pay for a determined pay period.

How does gross vs. net pay vary by country?

Again, gross vs net pay is determined by the income tax laws and standard payroll deductions in each country. However, generally speaking, there are certain basic standards that vary in vital ways. If you’re a US, UK, or European-based business owner looking to expand your operations into another country, you should have a basic knowledge of these laws.  

In the US, standard deductions include:

  • State taxes
  • Federal taxes
  • Social Security
  • Wage Garnishments (For instance, if an employee owes back child support or taxes, they may have a court-mandated wage garnishment)

In the UK, standard paycheck deductions include:

In the EU, standard paycheck deductions may include:

  • European tax (but not national taxation)
  • Pension
  • Health Insurance
  • Unemployment Insurance
  • Accident coverage

The human resources management team you hire should have a thorough understanding of these laws, and can take care of detailed job postings and salary determinations so that you can concentrate on growing your company.

How can Europe HR Solutions help?

When it comes to gross vs net pay, it’s important to understand what the difference is in each country where you want to do business. You may feel overwhelmed by learning the payroll variances in foreign nations, and if you don’t delegate this responsibility, it can hinder your larger goals.

At Europe HR Solutions, our team of human resources professionals can take care of the responsibilities of your salary and job postings. Based in Belgium, we have assisted many US and UK-based companies (both large and small) to ensure they maintain legal compliance as they grow in Europe. We’ve supported and helped many international companies take their businesses to the next level.  

Contact us with your HR outsourcing needs, and let us work alongside you to help ensure your successful growth.

Business owner surrounded by paperwork, indicating the need for HR outsourcing

How outsourcing HR can save money

If you own a small or mid-sized business, you understand how frustrating it can be to spend time and money on tasks that don’t generate revenue. The costs of building an HR department from the ground up can prove astronomical. 

When you’re launching your small business in a foreign country, especially, you’ll need HR solutions before you open your doors for daily operation. Europe HR Solutions can help.


The right outsourced HR team can reduce your ongoing costs in the following ways:

  • Payroll administration:

By outsourcing your HR, you can bring in vetted professionals to set up and administer your payroll system. This team can train you to ensure a seamless transition after their service contract is completed. 

You won’t have to stress over hiring long-term employees to take care of payroll, or training payroll administrators.

  • Benefits implementation:

Your outsourced HR team can help you to select the right benefits software package and enroll the employees of your small business.

  • Human resources management:

Outsourcing your HR can prove to be a game changer for your overall human resources management, too. HR consultants contribute through a wealth of experience in compliance, employee relations, and recruitment.

This saves valuable time for small business owners, mitigates the risk of legal issues and delays in operations, and provides access to the latest industry best practices and trends.

When it makes sense to outsource HR for small businesses  

International companies with fewer than 50 employees are considered small businesses, and rarely expand to Europe with an inhouse HR team already in place.

For US and UK-based small businesses that launch European operations, there’s usually a CFO who oversees broad HR tasks. 

However, the CFO or other executives managing HR for a small business launch in Europe often lacks the country-specific legal and HR expertise necessary to ensure innovative solutions that reflect the country’s best HR practices and legal compliance.

It’s important to consider the following when determining whether or not you should outsource your HR:

  • What specific HR services and support does your business require?
  • Do you have anyone on your team who’s well-versed in country-specific employee regulations and labor laws?
  • Will you need management compliance training and support?
  • Will your current employment handbook, policies, and procedures translate to adhere to the needs of employees in different countries?
  • Do you have a small HR department in place that may need help implementing payroll, benefits, training, and development?
Time is money. Outsourcing HR saves time, letting you focus on what matters.

What to expect with Europe HR Solutions

By outsourcing your HR, you may find it’s easier to take care of your daily operations and to strategize and prepare for the launch of your small business in Europe. Europe HR Solutions has supported countless small, mid, and large-sized businesses in their international HR needs.  

Whether you need our team to manage your HR and implement solutions, or you need us to help guide the HR professionals you have on staff, we can sweat the small stuff to ensure your big picture remains intact. 

You can expect Europe HR Solutions to do the following:

Act as your representatives:

We’ll act as an extension of your small business. This means we will collaborate with you and ensure we’re promoting your vision and standards in any HR matters we handle for you.

Ad hoc requests:

We understand that you may have ad hoc requests. We’re used to fast-paced, high pressure situations, and will ensure your needs are met in a timely manner.

Assist with HR strategies:

We’re committed to providing HR services that help your business grow and succeed. We’ll make certain that the innovative solutions we offer adhere to your overall business and HR strategies.

Create and implement policies and procedures:

We’ll strategize with you to create and implement your company’s policies and procedures and ensure details are in place that will help your employees thrive and create a positive work environment.

Handle employee contract needs:

We’ll help to create and manage your employee hiring processes (including talent acquisition, interviews, and onboarding checklists), employee complaint procedures, performance reviews, and off-boarding processes.

Legal compliance:

Europe HR Solutions will use our thorough knowledge of the various nuances in employment regulations and labor laws to keep your operations, policies, and procedures within legal compliance. This will help reduce your liability risk should issues with employees arise.

Manage employee and management training and development: 

We can cover government-mandated and specific position training programs to support your employees to work with excellence and grow in their positions. This includes compliance training for managers.


We can utilize the latest in talent acquisition trends and industry best practices to make sure you attract the talent you deserve to fill your staffing needs. We want to help you to build the best team possible to create a positive work culture and  a productive team.

The cost of outsourced HR services for small businesses

When to outsource your small business’s HR could be determined by your available budget. The cost of outsourcing your HR may be an upfront expense, but in the long run, it can save you significant money and protect your revenue.

The services offered by Europe HR Solutions can vary in cost, and are dependent on the extent of service you require. We can determine the cost based on the scope of the project.

For example, you may need us to manage a specific, well-defined project that allows us to estimate the cost involved. However, you may require our services on a daily basis, for an extended period of time, or find you need support in an immediate HR emergency. This may mean we will need a retainer payment or charge for an hourly rate.

How to determine your HR outsourcing needs

Before you decide to outsource your HR, it’s vital to determine what type of services you require. It can be overwhelming to discern your needs, but reflecting on and strategizing about specifics can be beneficial.

Answering the following questions may help you to understand what services you require:

  • Do you need an outsourced HR professional who takes the time to know and understand your business, staff, and culture?
  • Do you need HR professionals who are available on a daily basis?
  • Are you in dire need of help with critical talent acquisition?
  • Do you require flexibility and a large scope of HR tasks?
  • Are your needs limited to legal compliance and knowledge?
  • Do you need help developing your workplace culture?
  • Do you need to overcome language barriers?
  • What are your long-term HR needs?

Other benefits of outsourcing your HR

Once you’ve determined when to outsource HR for your small business, you may find that it allows you to streamline your operations and focus on your overall business strategy.

This strategic move reduces your administrative burdens of managing payroll, benefits, and other HR tasks in-house. The cost-effectiveness of outsourcing becomes evident as it eliminates the need for investing in HR infrastructure and ongoing training. 

This newfound flexibility can enable your small business to adapt quickly to market changes and allocate resources more efficiently. Ultimately, an outsourced HR team becomes a strategic partner, and empowers you to prioritize your employees, enhance organizational efficiency, and thrive in the competitive European business landscape.

Contact Europe HR Solutions

Europe HR Solutions understands how crucial HR is to the foundation of any successful business. We can consult with you to determine when it’s best to outsource HR for your small business, and customize innovative solutions with you. 

Your HR needs remain our greatest priority, and we want to support you in ways that promote legal compliance and allow you to see your small business dreams come to fruition. 

Connect with Europe HR Solutions today for a free consultation and be sure to check out our blog for the latest HR insights, tips, and trends. The road to success for your small business is just an HR step away.

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    Inez Vermeulen

    Inez Vermeulen

    Inez Vermeulen is the Founder and CEO of Europe HR Solutions, with over 25 years of successful corporate and entrepreneurial experience in various global industries. She has helped grow and expand the European divisions of global companies such as Coca-Cola Company, Regus, DHL, American Medical Systems, etc. Inez has received several company awards for her entrepreneurial spirit and success.

    She owns a Bachelor’s degree in French, History and Latin, several HR global expert certifications, a Master’s degree in Metaphysical Sciences, ICF Coach Certification and has completed her Doctorate on Transformational Leadership. Inez is fluent in Dutch, English, French, Italian and German. She works in partnership with an extensive international network of independent & professional companies and resides in Belgium near Brussels with her husband Jan.