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Payroll tax in 2018 and 2019Tax, social security law and employment conditions for national and international employers and employees.

Although the greatest care has been taken in the compilation of this brochure, it is always possible that over the course of time certain information may become outdated or is no longer accurate. Our LLPs therefore cannot be held liable for the consequences of action or inaction on the basis of anything in this publication.

The information provided in this brochure was based on the current legislation in December 2017, including the relevant bills presented to Parliament on Budget Day 2017 and adopted by the Lower and Upper Houses of Parliament. Not all of these bills had been passed by the Upper House at the time this brochure was being prepared. The information relating to such legislation is therefore subject to that. Further provisions could also be included in ministerial implementation rules. Case law may also change the interpretation of such legislation.

Payroll tax in 2018 and 2019Tax, social security law and employment conditions for national and international employers and employees

Payroll tax in 2018 and 20191

De loonheffingen in 2018 en 2019 2

This brochure provides an overview of the most important developments in the field of payroll tax and employment conditions for 2018 and 2019 as far as these were known in December 2017. We have, of course, looked closely at the Rutte III Coalition Agreement, entitled ‘Vertrouwen in de toekomst’ (Faith in the Future). Major changes are looming from 1 January 2019, including for employers.

We have addressed here the various topics which you as finance director, HR director or executive, payroll administrator or financial controller may be faced with. There is far more we could say about each individual topic. For the sake of readability, however, we have provided concise summaries in this brochure. If you would like more information about certain topics, we would be happy to help you.

Contracts with freelancers and independentsFor several years now there has been one topic at the top of the list of business concerns. And that is the hiring of freelancers and self-employed independent contractors. This topic has also been under the political spotlight and in the headlines. Something which will continue in 2018 and 2019. There has been and continues to be concern and uncertainty among both clients and contractors about the possibility of supplementary assessments for payroll tax, with penalties. For this reason enforcement of the Assessment of Employment Relationships (Deregulation) Act (DBA) - or, rather, the abolition of VAR statements - has been suspended until 1 July 2018. Only where there is clear evidence of ‘malicious intent’ there should be any concern about whether in the guise of self-employment (i.e. bogus self-employment) people are actually working as employees. The date of 1 July 2018 is not an end date owing to the policy intentions announced in the Rutte III Coalition Agreement of 10 October 2017.

It was announced in the Coalition Agreement that the DBA legislation would be shelved. So in the end, one of these days has become none of these days. To end the disquiet and uncertainty surrounding the contracting of the self-employed, the new Cabinet is aiming for a system based on a web module. We will look at this new approach in Section 2. After reading it you will know what you should - and should not - do in 2018.

We hope that the information provided in this brochure will again be useful to you this year. In 2018 the People Advisory Services (PAS) Practice Group of EY Belastingadviseurs LLP will, as always, be on hand to support you in taking decisions and making choices concerning your employment conditions policy, and in implementing measures to ensure that you remain ‘in control’ of your payroll tax situation. Anticipating potential risks in time will help you to avoid any unpleasant financial surprises later on.

Introduction

1. The main headlines at a glance 5

2. From VAR via BGL to DBA and back to BGL again 62.1 The DBE legislation: first deferral2.2 The Rutte III Coalition Agreement: one of these days becomes none of these days2.3 What you should (and should not) do in 2018

3. Penalty levies in payroll tax: update 83.1 The early retirement scheme (RVU) penalty levy of 52%3.2 The 75% punitive levy on excessive severance packages

4. International payroll tax 104.1 The new social security treaty with China4.2 Social security in the EU/EEA4.3 The future of the 30% facility4.4 Cross-border employee tax credits in 20194.5 Staff recruited abroad

5. Payroll tax for directors and supervisory directors 145.1 Company directors5.2 Supervisory directors and other supervisory officers5.3 Directors of associations, societies and foundations

6. The company car from 2017 166.1 The company car or van brought later than 20176.2 The company car or van bought before 20176.3 Changing company cars6.4 The Tesla tax6.5 Making a company car available and providing counter evidence

7. Subsidies for employers and tax facility for employees of start-ups 197.1 The Salary Costs (Incentive Allowances) Act7.2 The Promotion of Research and Development Act (WBSO)7.3 Tax facility for employees of start-ups

Contents


8. What you need to know about work permits in 2018 238.1 International trade relations 8.2 Encouraging entrepreneurship8.3 Services provided within the EU (WagwEU)8.4 Coalition Agreement and labour migration8.5 IND supervision of recognised sponsors8.6 Salary standard for knowledge migrants

9. What you need to know about the changes to employment law in 2018 259.1 Faith in the future is a step back in time for employment law9.2 Return of the Salomon’s judgement and the subdistrict court formula9.3 More balance in the Transitional Compensation9.4 Temporary contracts for temporary work9.5 Trial period9.6 Payrolling9.7 Reducing the obligations related to continued payment of salary to sick employees9.8 More incentives in work disability insurance schemes to get employees back to work9.9 Employment law changes in 2017 and 2018

10. Other items 2810.1 Once again: the work-related costs scheme (WKR)10.2 For public and semi-public sector employers: the WNT in 201810.3 Further increase in the pensionable age for the State old-age pension (AOW)10.4 Increase in standard retirement age10.5 2018 contribution percentages for Sector Funds and proposal in Rutte III Coalition Agreement10.6 Private top-up of WW and WGA contributions10.7 Current status of the WagwEU10.8 For payroll administrators: the calculation of employee insurance contributions and the health insurance

contribution, the wage periods system and the progressive cumulative calculation (VCR) system10.9 What the use of robots could mean in terms of your salary and personnel administration 10.10 Change in maximum tax rate

Annex: Figures for 2018 34

List of contacts for the People Advisory Services (PAS) Practice Group of Ernst & Young Belastingadviseurs LLP

Payroll tax in 2018 and 2019 4

To start with here is a brief overview of the most important news in the area of payroll tax and employment conditions in 2018 and 2019. Elsewhere in this brochure you can read more about these topics.

• Prepare yourself for the new legislation that has been announced concerning whether freelancers and independents are employed or not and the new obligations when entering into contracts with them. We have set this out in Section 2 along with what you should (and should not) do in 2018.

• There are two payroll tax penalty levies which employers may be liable for. These are the 52% punitive levy on banned early retirement schemes and the 75% punitive levy on excessive severance packages. Has your organisation been affected by these penalty levies? Then see Section 3.

• If you have staff working internationally you should certainly read Section 4. There is a new social security treaty with China and changes in the 30% facility from 1 January 2019. The payroll tax of cross-border employees will change in ways that will affect their net salary on their payslip.

• The payroll tax obligations concerning directors and supervisory directors in companies as well as associations, societies and foundations are not always clear, not least due to (yet another) change from 1 January 2018. We have set out a number of considerations in Section 5.

• Company cars continue to be a payroll tax headache. In Section 6 you can read what the transition arrangements for the Memorandum on Vehicles II (Implementation) Act provide for and the impact of the ‘Tesla tax’.

• In Section 7 we have brought together a number of subsidy opportunities for employers. We also include details of how these affect your payroll accounting.

• Besides tax and social security legislation changes in 2018, civil law changes in 2018, such as changes to provision law and concerning work permits, will also affect your employment policy. See Sections 8 and 9 for an update.

• A new trend: automation is being supplemented by the use of robots. You can read about the cost savings that this could bring in Section 10.9.

1. The main headlines at a glance


2. From VAR via BGL to DBA and back to BGL again

2.1 | The DBE legislation: first deferral

Is the freelancer or self-employed person you have hired really a business owner or actually a (notional) employee? Every commissioning client has to ask this very important question because qualification as a ‘notional’ employee has major financial consequences. The client is then deemed to be the employer and required to remit all applicable payroll taxes. If the client fails to comply with remittance requirements, then supplementary tax assessments with interest and possibly penalties too, may follow.

The VAR system (VAR: Statement of Employment Relationship) eliminated this uncertainty in advance but since 1 May 2016 the VAR has been replaced by the Assessment of Employment Relationships (Deregulation) Act (DBA). The DBA legislation centres on model agreements published by the Tax and Customs Administration which are intended to clarify the status of the freelancer as either an independent business owner or an employee. In practice it became clear that this approach did not work and the DBA legislation caused a great deal of uncertainty and concern. Clients stopped using the services of real freelancers and independent contractors. It was decided to suspend the enforcement of the DBA legislation, initially until 1 January 2018. This period was then extended to 1 July 2018. This transition period of indemnification from supplementary assessment with penalties does not apply in clear cases of ‘malicious intent’.

‘Malicious intent’Only if your organisation has been deemed to be of ‘malicious intent’ the DBA transition period will not apply. In such event you can expect supplementary assessments for payroll tax with interest and penalties because as the employer you are required to withhold payroll taxes with retroactive effect. The State

Secretary for Finance believes that the number of cases of ‘malicious intent’ will be very small. To be deemed as such you must already have quite a bad record. The State Secretary considers organisations making use of freelancers to be of ‘malicious intent’ only where there is deliberate fraud or deception involved. This could include situations involving deceit, forgery, or collusion, or situations which lead to unfair competition, economic or social disruption or where there is the risk of exploitation. You can judge for yourself whether this description would apply to your organisation!

The Exemption from Payroll Tax Withholding (Implementation) Act (BGL)There was another bill put forward prior to the DBA legislation. This was the Exemption from Payroll Tax Withholding (Implementation) Act (BGL). This bill failed to be adopted. It envisaged using a web module - based on the British example - to apply for a decision stating that the self-employed person was not an employee on the basis of which the client would be indemnified from the withholding and remittance of all payroll taxes. Based on the plans of the new Cabinet it is likely that the principle behind the BGL legislation will return.


2.2 | The Rutte III Coalition Agreement: one of these days becomes none of these days

The new government has recognised that the DBA legislation offered no solution to the problem of bogus self-employment and that it has actually caused considerable disruption. The Assessment of Employment Relationships (Deregulation) Act (DBA) has therefore been shelved. The new legislation must provide those who are really self-employed and their clients with certainty that there is no employment situation involved, on the one hand, and prevent bogus self-employment, on the other hand.

We anticipate that the new bill will be submitted to parliament during the course of 2018 and possibly enter into force from 1 January 2019. Following the introduction of the new legislation the tax authorities will pursue a policy of limited enforcement (i.e. no penalties further to a first inspection) and adopt mainly a coaching role. This is intended to help the parties involved with the application of the new legislation. This transition period is essentially a further extension of the present period in which the Tax and Customs Administration has not been enforcing the Assessment of Employment Relationships (Deregulation) Act (DBA) - except in cases of ‘malicious intent’.

Based on the Rutte III Coalition Agreement the new legislation will take the following form in outline:

At the lower end of the marketWhere self-employed people work for a low hourly rate and for a longer contract period (more than three months), or in combination with performing regular business activities, then they will always be deemed as working on the basis of an employment contract. An hourly rate of less than €15/18 has been mentioned.

At the upper end of the marketWhere a high hourly rate applies (more than €75 per hour) together with a shorter contract period (less than a year) or in combination with not performing regular business activities, then the self-employed person may be excluded from the payroll tax regime (opt out).

In-between category A ‘client statement’ will be introduced for self-employed people charging more than the low rate. This will provide the hiring party with clarity and certainty when contracting the services of self-employed professionals and contractors. The client will be issued with this statement after completing the web module. This client statement will indemnify the client by providing certainty in advance that payroll tax and employee insurance contributions do not have to be withheld and remitted (unless the questions in the web module have not been answered truthfully). This client statement essentially works in the same

way as the previous concept that formed part of the Exemption from Payroll Tax Withholding (Implementation) Act (BGL).

Entrepreneurship agreement?The government intends to investigate whether and how independent business owners can be incorporated into the Dutch Civil Code through the introduction of an entrepreneurship agreement. This could help to clarify and strengthen the position of independents.

Flaws There are two flaws in this solution to the problem of actual and bogus self-employment envisaged by the new Cabinet. The first lies in the distinction between performing work which either is or is not part of the client’s normal business activities. In practice, this distinction will not always be clear and give rise to discussion. A second point is the three-tier classification of the self-employed for tax purposes into 1) real independents charging a high hourly rate; 2) the bogus self-employed on a low hourly rate; and 3) an in-between category. This three-way division still fails to address the issue of determining whether or not the contract is one of employment under civil law with the attendant consequences. Only after the Dutch Civil Code has been amended - perhaps to include an entrepreneurs’ contract - civil labour law will be brought into line with the tax treatment of the self-employed.

2.3 | What you should (and should not) do in 2018

In the Rutte III Coalition Agreement the new government has announced that the new legislation will include an implementation period of no more than a year. During this period - provided you are not of malicious intent - you need not fear the imposition of supplementary assessment with interest and penalties.

We will have to wait until the new bill is submitted to parliament and what statutory provision is ultimately published in the Bulletin of Acts and Decrees. Should you do nothing until then? Until 1 January 2020 or possibly even later? No. We recommend that you review your present contracts with freelancers - and particularly the duration and nature of the work (regular and other business activities) - in light of the anticipated new legislation. It has been announced that a distinction will be made between contracts shorter or longer than three months (for regular business activities) and shorter or longer than a year (for other activities). So you can prepare in advance of the new legislation. Where necessary you may conclude an agreement to provide services with your freelancers and other self-employed contractors, possibly based on one of the model contracts published by the Tax and Customs Administration. These agreements to provide services must exclude the use of any form of notional employment. We will, of course, keep you fully informed of all political developments.


3. Penalty levies in payroll tax: update

3.1 | The early retirement scheme (RVU) penalty levy of 52%

Making older employees redundant can have the consequence that you as the employer have to pay a punitive levy of 52% on the value of the redundancy scheme. This penalty is imposed if the severance package you agree with your employee(s), qualifies as an early retirement scheme (RVU). An early retirement scheme is the same as a ‘VUT’ scheme as it used to be known, but is now much more heavily taxed.

Voluntary employee exit/replacement schemesThe Supreme Court is currently considering the question of whether an early retirement scheme can be said to exist in the event of collective redundancy for the purpose of a business reorganisation (the position adopted by the tax authorities), if the employees designated as surplus on the basis of the proportionality principle ‘are permitted’ to swap places with older colleagues who have volunteered to leave the company. The consequence of this may well be that relatively more older people will be made redundant than younger colleagues. If this remains within a margin of 10%, then the Tax and Customs Administration is willing to accept that it is not an early retirement scheme. Where this margin is exceeded then it is deemed to be an early retirement scheme subject to the punitive levy according to them. A Court of Appeal has ruled against the tax authorities. The Supreme Court still has to issue its judgment on this important matter.

No early retirement schemeIn four cases a banned early retirement scheme will not be recognized. You will not be liable for the 52% punitive levy, if:

1. the employee continues to work at least 50% part-time (older employees scheme);

2. the arrangements that you make can be deemed as an actual pension scheme;

3. the employee is dismissed for objective reasons, such as a dysfunctional performance, character incompatibility or in the context of a business reorganisation in which the proportionality principle is applied (also known as the qualitative test);

4. the employee receives a severance payment in the period between the date of redundancy and the two-year period prior to reaching the age at which they are entitled to claim a State old-age pension (AOW) or an earlier pension date, who can finance an income of no more than 70% of the last salary earned, taking into account any other income such as unemployment benefit (WW), a pre-pension scheme or a life-course savings payments (also referred to as the qualitative test).

Step-by-step planIf you are considering letting go of one or more older employees, always check in advance that the severance scheme does not qualify as a banned early retirement scheme. You can follow this step-by-step plan:

• Look at what options there are to start working part-time. If the employee actually continues to work for at least 50% of their original working hours, then a salary top-up is not an early retirement scheme, even if you continue to pay the full amount of the original salary.

• Check with your pension provider whether there is a fiscal pension gap that can be used to improve the employee’s retirement pension. The early retirement scheme penalty levy is never applicable to such pension improvements - even where this forms part of a redundancy scheme.


• Determine whether the position can be taken that the main reason for dismissal is dysfunctional performance or incompatibility of characters. It is recommended that you make a case file which shows that the employee was given the opportunity to remedy their dysfunctional performance or that certain people can no longer work together.

• In the event of collective redundancy make sure that the proportionality principle has been correctly applied. In the age range of 55 years and older 10% more employees may be made redundant compared to the number calculated by applying the proportionality principle.

• If the redundancy scheme includes voluntary departure make it open to all employees. If it is limited to a particular group of older employees it will easily be seen as an early retirement scheme. If possible, wait for the decision of the Supreme Court on the early retirement scheme punitive levy in the case of an age-independent voluntary redundancy scheme.

• Check what income the employee can finance with the redundancy payment in the period from the date of redundancy up until two years prior to reaching the age at which they are entitled to claim a State old-age pension (AOW) or an earlier pension date (the 70% test).

• If in doubt: ask the Tax and Customs Administration in good time for a decision that your redundancy scheme is not and early retirement scheme. You need to do that before you introduce the redundancy scheme.

3.2 | The 75% punitive levy on excessive severance packages

In addition to the 52% punitive levy on early retirement schemes, the law also provides for a 75% punitive levy on excessive severance packages. To summarise, this punitive levy becomes liable if an employee with an annual salary of more than €540,000 (the indicative salary in year t-2) has an income from salary in the departure year (year t) of more than €1,080,000. The amount of the taxable salary in the intervening year t-1 is also relevant. If the salary includes a severance payment which also qualifies as an early retirement scheme - which is possible - then the punitive levy on early retirement schemes of 52% is applicable and not the 75% punitive levy on excessive severance packages.

The calculation of the amount of an excessive severance package is rather complicated. It may be such that a severance package subject to the punitive levy exists even if the employee who is leaving is not paid anything at all as a severance payment.

All salary income in the year of departure - including holiday pay, company car, bonuses or benefits from share schemes or certain share option schemes - are notionally deemed to be part of a severance package.

Change from 1 January 2018Up until the end of 2017 all benefits from share option schemes were excluded from the 75% tax base if the options were awarded before the year prior to the severance year. This applied to both conditional and unconditional options. From 2018 only options awarded unconditionally or which became unconditional before the year (t-2) prior to (t-1) and the severance year (t) will not be included. The benefit of all conditional options awarded that become unconditional after year t-2 will be deemed to be part of the severance package.

In all cases, the benefit of share schemes which are not option schemes will form part of the tax base on which the punitive levy on excessive severance becomes liable.

Influence of the work-related costs scheme (WKR)Case law confirms the position of the tax authorities that when calculating excessive severance packages all allowances and employment benefits designated as work-related costs also count towards the total amount. This may be to your benefit if the indicative salary in year t-2 was more than the increase in departure year t. In the reverse situation, it will be a drawback of course. Allowances and employment benefits which mainly affect the amount of severance packages include the 30% facility for extra-territorial costs and the tax-free allowance to cover the school fees of an international school.

What should you do?If it is intended to terminate the employment contract of a highly paid executive, check at the earliest possible stage how much your liability for the 75% punitive levy on excessive severance packages could amount to. There are avenues by which it is possible to avoid or reduce this punitive levy. Pay particular attention to the benefits accruing from share and option schemes.


4.1 | The new social security treaty with China

The social security treaty between the Netherlands and China was signed on 12 September 2016. This treaty entered into force almost a year later on 1 September 2017.

Scope of the treatyUnder the new social security treaty Dutch personnel seconded to China can maintain their social security cover in the Netherlands. The interesting aspect of this treaty is that for the Netherlands it is limited to the State old-age pension (AOW), surviving dependants benefit (ANW) and unemployment benefit (WW). This means that - depending on where your employee is working in China - regional contributions will still be liable there, for example, to cover medical expenses and occupational accidents. The Dutch income-related health insurance contribution will then not be payable. An international medical insurance policy is recommended.

Conversely, Chinese companies in the Netherlands no longer have to pay double contributions for their staff seconded to the Netherlands. These people can continue to have social security coverage in China for their State pension and unemployment benefit. The treaty therefore covers only part of the system of employee insurances. The work disability insurance and health insurance contributions are excluded, as are any other insurances (other than the Dutch AOW, ANW and WW) for which contributions are payable either in the Netherlands or in China.

Secondment provisionOn request the insurance requirement during secondment remains in the original work country, in principle, for a maximum period of 5 years. By exception a longer period can be agreed but this does need the approval of both social security authorities. Successive periods of secondment of the same employee within

a period of 5 years (60 months) are seen as a single period of secondment unless these two periods are interrupted by a period of 12 months or more.

Application procedureThe employer should submit an application for a secondment certificate to the Social Security Insurance Bank (SVB). When this certificate is issued, the Chinese company must submit this document to the competent social security authorities in China.

This process must be completed within six months of the start of the secondment. No retroactive effect will be possible if the six month period has expired. Non-working family members accompanying the employee may also be insured under the same secondment certificate.

Existing secondmentsFor staff who have already been seconded to China, the five year period began on 1 September 2017. If the employee wishes to continue their Dutch AOW, ANW and WW, it is recommended that you make sure that a secondment certificate is issued within six months.

What should you do?Do you do business with China? Check in good time what the social security consequences will be for your seconded staff and any family members accompanying them. Apply for a secondment certificate in time from the SVB and arrange suitable medical insurance.

4. International payroll tax


4.2 | Social security in the EU/EEA

People who regularly work in two or more EU Member StatesWithin the European Union and the European Economic Area (EEA) there are mandatory regulations which determine in which country a cross-border employee is insured for social security purposes. The employer is typically required to register for the remittance of contributions in that country. Particularly in situations where an employee is usually working in two or more EU Member States - for example, an employee who lives abroad works not only in the Netherlands but also at home - a correct and timely assessment of their insurance requirements in advance can avoid a great deal of ‘repair work’ later on. The European Court of Justice ruled in 2017 on when someone is ‘in the habit’ of working in two or more EU Member States.

What should you do?Do you have personnel working ‘across the border’ or employees living abroad who work for you in the Netherlands? Check in advance not only in which country your employee’s salary is taxable but also where his or her social security cover is and where you are required to remit social security contributions.

Secondment statements (A1s)The Advocate-General to the European Court of Justice (hereafter ECJ) made an important recommendation in November 2017 about the application of A1 statements. The ECJ itself still has to issue its decision, but this matter may be very important to you. We will explain why.

If employees of employers based in other EU/EEA Member States work in the Netherlands, in principle, Dutch social security contributions are payable. This is known as the country of employment principle. An exception applies for temporary secondment (for a maximum of two years with the possibility of an extension). Under certain conditions the seconded foreign employee then remains covered for social security purposes in their original country of employment. The social security body in the posting country can confirm that the secondment arrangement applies by issuing an A1 certificate (previously known as an E101 statement). This certificate essentially provides confirmation that Dutch social security contributions are not payable on the salary earned in the Netherlands. This will be

important to you if the foreign employees concerned work under your management or supervision, or where contracting is involved. In these two situations you can be held liable for all payroll taxes that the employer based abroad failed to pay in the Netherlands. Not being accountable for unpaid Dutch contributions considerably reduces your liability.

At the moment A1 statements provide indemnification. As long as an A1 statement has not been withdrawn or declared invalid by the issuing EU/EEA Member State, the recipient EU Member State remains bound by it and is not permitted to levy contributions. The Advocate-General has recommended to the ECJ to rule otherwise in cases where A1 statements have been fraudulently obtained. He concluded that in cases of fraud the country of employment is not bound by A1 statements issued by the other EU Member State. The country of employment may then levy social security contributions. This will affect your liability.

What should you do?Do you hire staff from employers based in another EU/EEA Member State or contract work out in the Netherlands to foreign contractors? Always ask for original A1 statements to be provided to show that the employees concerned do not have social security cover in the Netherlands. Make and keep copies of all the A1 statements. Keep abreast of the ECJ ruling on the value of A1 statements that is expected during the course of 2018. Check for yourself that your foreign counterpart has not acted fraudulently. In order to do this investigate their background, history and activities in the country in which they are based.

In addition, there is a proposal pending in the EU to change the current EU regulation on social security, also to improve the application of A1 secondment statements.

4.3 | The future of the 30% facility

The 30% facility provides in a tax-free allowance to cover the extra-territorial costs incurred by staff if they are seconded to the Netherlands or have been recruited from abroad. Under certain conditions, 30% of the salary from current employment is tax exempt. The maximum period in which the 30% facility may be applied is currently eight years.


The Rutte III Coalition AgreementThe new Cabinet intends to reduce the duration of the 30% facility by three years, to five years, from 1 January 2019. This tax facility will therefore be considerably reduced for staff asked to work in the Netherlands after 31 December 2018.

Consequences for employersIn international situations employers are more often making net salary agreements with personnel working abroad. They then pay the tax liable on the net salary themselves (‘tax equalisation’). Reducing the duration of the 30% facility to a maximum of five years means that the employer’s burden will greatly increase from the sixth year.

Transition arrangements?It is not yet clear how the 30% facility arrangements still current before 1 January 2019 will be affected by the reduction in the application period. Will these people be able to complete the period of eight years that was granted, or will they too be faced with a reduction? This will only become clear when the new government submits its proposed legislation to amend the 30% facility to parliament in 2018.

What should you do?Do you employ staff who make use of the 30% facility or are you intending to employ such personnel? Then take into account the consequences of the announced reduction in the duration of the 30% facility from eight to five years from 1 January 2019, particularly if you have made or intend to make net salary agreements.

Constant considerationFor employees who apply the 30% facility you constantly need to check the salary threshold. Employees receiving the 30% facility must have earned a taxable salary of more than €37,296 (€37,000 in 2017). For young people holding a master’s degree a lower taxable salary applies of more than €28,350 (€28,125 in 2017). If this minimum salary is not met then the 30% facility lapses not only with retroactive effect to 1 January of the calendar year in question, but also forever in the future. It is advisable to make this salary assessment on a regular basis. A taxable salary which is too low can be corrected through partial application of the 30% facility - but only if this is done on time. In such event the employee might receive a tax-free allowance for extra-territorial costs of, e.g., 27.5% of salary from current employment.

4.4 | Cross-border employee tax credits in 2019

The Miscellaneous Tax Measures Bill 2018 which limits the tax credits for non-resident taxpayers from 1 January 2019, was presented on Budget Day 2017. These employees will then no longer receive some of the tax credits paid through their payslip but will have to submit an income tax return to claim them. The reason for this change is that at the moment applying the full tax credits in the payroll for this group can result in an amount payable via an income tax assessment.

What this meansBased on the bill from 2019 only the tax component of the employed person’s tax credit will be applied in the payroll for non-resident taxpayers from the EU, EEA, Switzerland or the Dutch Caribbean. Under certain conditions they are also entitled to the tax component of the general tax credit, the young disabled person’s tax credit, the elderly person’s tax credit and the single elderly person’s tax credit, but they will have to claim these tax credits through an income tax return. The tax component of all tax credits will lapse for all other foreign taxpayers. They will have to claim the tax components of all tax credits through an income tax return.

Consequences for cross-border employeesCross-border employees who are tax liable in the Netherlands will be most affected by the decision to scrap the general tax credits in wage tax. These tax credits amount to around €550 at the moment and will result in a cut to the monthly net salary of around €46. Because these general tax credits are income-dependent and gradually diminish as the salary increases, the net effect will be less or even zero for those on higher salaries. These cross-border employees will also have to submit a Dutch income tax return to be able to claim the tax component of all other tax credits apart from the employed person’s tax credit.

What should you do?Inform your cross-border staff in time in 2018 about the changes from 1 January 2019 and what the net effect on their payslip will be.


4.5 | Staff recruited abroad

If your organisation employs staff recruited from abroad or if employees from a foreign group company are seconded to you, then we recommend that you check a number of things.

The 30% facilityIf these staff make use of the 30% facility check that your organisation has procedures in place: i) to check in time that every employee making use of the 30% facility has earned sufficient taxable salary, i.e. a salary which is at least equal to the applicable standard, and ii) to notify you in time that the duration of the 30% facility has not expired. This is set out below.

i) The salary thresholds which applied in 2017 were at least €37,001 (general) or €28,126 for graduates under the age of 30 holding a master’s degree. No salary standards apply for certain groups of employees, such as academic researchers and doctors training to become medical specialists. The salary standards for 2018 are a taxable salary of at least €37,297 or €28,351, respectively.

ii) The maximum duration of the 30% facility was ten years and that was reduced to eight years from 1 January 2012. This maximum period is shortened by the amount of any previous periods of employment or residence in the Netherlands. The end date for the 30% facility is stated in the 30% facility statement issued by the Tax and Customs Administration. Continuing the 30% facility after the end date - even unintentionally - can lead to supplementary assessments with added interest and a penalty.

Foreign pension schemesIf an employee from a foreign group company is seconded to you, it may be possible for the employee to continue to take part in the foreign pension scheme during the period of the secondment to the Netherlands. In principle, the employer’s share of the foreign pension contributions is taxable salary and the employee’s contributions are not tax deductible. This can be avoided by having the foreign pension scheme designated by the tax authorities as a qualifying pension scheme in the Netherlands. The Netherlands then treats the foreign pension scheme in the same way as it would be done abroad from the tax perspective. The employer’s share may then not be taxed and the employee’s share tax deductible.

Designation as a qualifying pension scheme by Dutch standards applies in principle for a maximum period of FIVE years. Check that this period has not expired. If the employee continues to work in the Netherlands after five years with continued participation in the foreign pension scheme, then the employer’s share towards the pension contributions will almost always be taxable salary and the employee’s contributions will no longer be tax deductible.


5.1 | Company directors

Since 1 January 2013 companies could adopt a management model with just one board. This single tier model is generally referred to as a ‘one-tier board’. The board of the company will have on it both executive and non-executive directors (supervisory directors). Under the two-tier model the board of supervisory directors is separate. Also per 1 January 2013 it was decided that new and existing directors of listed companies were not employed by ‘their’ company.

Change from 1 January 2018 It was not always clear how these corporate law structures affected payroll tax, e.g. is there (deemed or notional) employment involved which requires the withholding and remittance of payroll tax? An amendment to the legislation that enters into force from 1 January 2018 has now made this clear.

Listed companiesUntil 2017 all directors of such companies with a one-tier board were deemed to be notional employees, even the non-executive directors, who were actually supervisory directors. This was contrary to the notional employment of supervisory directors which had already been abolished from 1 January 2017. This omission has been repaired from 1 January 2018: only executive directors are deemed to be notionally employed and non-executive directors (supervisory directors) no longer so. The company has wage tax obligations only with respect to its executive directors.

Unlisted companiesExecutive directors are actually employed by the company and non-executive directors (supervisory directors) are not. The company has no payroll tax withholding and remittance requirement with respect to the latter.

5.2 | Supervisory directors and other supervisory officers

Supervisory directors working for companies with a two-tier board, supervisory officers of associations, societies and foundations and non-executive directors on a one-tier board, therefore, will no longer be deemed to be notionally employed. Under certain conditions they may voluntarily choose to be included in the payroll tax regime (‘opt in’). Both the individual concerned and the company, association, society or foundation need to report this to the Tax and Customs Administration. The condition which applies is that the income earned as a supervisory director/officer may not constitute profit from business activities for tax purposes, but must be result from other activities.

Voluntarily becoming subject to the payroll tax regime (opting-in) does not create a liability to employee insurances. The supervisory director/officer continues to be excluded. There are two more consequences:

• the company is required to withhold and remit the (lower) income-related health insurance contribution.

• the supervisory director/officer will no longer be able to deduct the actual amount of any business expenses incurred. The payroll tax regime has no provision for deductible costs. He or she can claim tax-free allowances and employment benefits from the company, association, society or foundation.

What should you do?Together with your supervisory director or officer look at whether or not it would be desirable or even possible voluntarily to become subject to the payroll tax regime (i.e. opt in).

5. Payroll tax for directors and supervisory directors


5.3 | Directors of associations, societies and foundations

These directors are not actual or notional employees, either for the levying of wage tax or for employee insurance contributions and the income-related health insurance contribution. On that basis, the association, society or foundation has no wage tax obligations. Under certain circumstances, however, these officials may be employed under civil law (i.e. for salary, individual paid work and the relationship of authority). For example, in large associations, societies and foundations where - in addition to the management tasks - the director is also responsible for the day-to-day operations. Where there is an actual employment relationship, of course, all payroll taxes will apply in full.


6. The company car from 2017

6.1 | The company car or van bought later than 2017

Up until 2016 there was a whole range of nominal addition percentages for the assumed private use of a company car or van. This was due to an equal number of environmental discounts on the general nominal addition percentage of 25%, which depended on the CO2 emissions and purchase date. From 2017 this will be slightly simpler as there will be only two percentages:

• at least 22%* of the list price of the company car or van, including Motor Vehicle Purchase Tax (BPM) and VAT as the general nominal addition percentage;

• at least 4%* for zero emission vehicles (electric or hydrogen powered), which is the general nominal addition percentage of 22% less an environmental discount of 18%.

There is also a third percentage - at least 35% of the commercial value - but this only applies to classic cars. These are vehicles that are 15 or more years old.

(*) Where private use is excessive the nominal addition can be set higher based on the amount (i.e. monetary value) of the actual private use. The burden of proof in this situation rests with the tax authorities.

6.2 | The company car or van bought before 2017

Although it has been made much simpler for vehicles bought after 2017, for vehicles purchased before that date it is as complicated as ever. The reason for this is that transition arrangements had to be put in place for all ‘existing’ vehicles with different environmental discounts and nominal addition percentages. In essence, the transition arrangements are that every car retains its original nominal addition percentage (less the applicable environmental discount) for a period of five years (60 months). When this period expires the set nominal addition percentage applies from the first day of the sixth year. However, if this date is after 1 January 2017 then the transition arrangements state that the general nominal addition percentage is 25% (and not 22%).

The consequences of this are odd. To take an example, from the first day of the sixth year an ‘old’ electric vehicle with an original nominal addition of 0% or 4% becomes 7% of the list price, i.e. nominal addition under the transition arrangements of 25% less the new environmental discount of 18%.

What should you do?Have your payroll administrator check the accuracy of the nominal addition percentage for each company car provided to one or more employees that has a purchase date prior to 1 January 2017. Is no nominal addition applied? Make sure that it is correct that no nominal addition is made.


6.3 | Changing company cars

You get a new company car in any given year: always nice and an exciting moment. From the tax point of view too it can be exciting - but perhaps not so nice - if you switch from ‘no private use’ to including private use of a brand new company car. Or the other way around. You had private use in the first instance, but because of the high nominal addition decided not to do that anymore and applied for a ‘Statement of no private use’.

It has been repeatedly ruled in the case law that if you have used a company car to drive more than 500 km for private purposes in a calendar year you are required to add the wage benefit for all the company cars (or vans) provided to you in that year.

Less than 500 km was driven with car number 1 (even on a calendar year basis) and you would expect that nothing should

be added to taxable salary for this car. The threshold of 500 kilometres driven for private purposes on a calendar year basis however was exceeded with car number 2 which leads to a nominal addition of 4%.

However, because more than 500 kilometres were driven for private purposes with both cars, a nominal addition should be made for both vehicles, as follows:

• car 1: 22% van €35,000 x 10/12 = €6,417• car 1: 4% van €60,000 x 2/12 = € 400Total €6,817Wage tax, say 52% €3,545

In this situation therefore €3,545 in wage tax has to be paid for 600 km driven for private purposes, making it an expensive €5.91 per kilometre.

Example 2017 Nominal addition Provided in the period No. of private kms driven

Car 1List price €35,000

22% 01/01 until 01/11 400 km

Car 2, electricList price €60,000

4% 01/11 until 31/12 200 km

Total 600 km


6.4 | The Tesla tax

From 1 January 2019 the low nominal addition of at least 4% for zero-emission electric cars will apply only up to a list price of €50,000. Above that the general nominal addition percentage of at least 22% will apply. This ‘Tesla tax’, as it is known, will not apply to hydrogen powered vehicles.

6.5 | Making a company car available and providing counter evidence

A nominal addition to salary for tax purposes applies only where a company car is provided which is also used for private purposes. The burden of proof rests with the tax inspector to demonstrate that a company car has been provided. If this is successfully done, then it is assumed that the employee has driven the car more than 500 kilometres for private purposes. The burden of counter evidence (which is much more difficult to meet) then rests on the employee to demonstrate that this is not so.

Providing a company carIt is not immediately such that a company car has been provided when an employee takes the wheel. The requirement is that the employee actually takes possession of the vehicle. The Supreme Court has ruled that a company car is not provided if one or more employees use the car only for the performance of certain tasks for the employer, e.g. in order to transport people or goods on the employer’s behalf. In cases of doubt it is therefore important to check whether you have provided a company car in this sense (i.e. for tax purposes).

Counter evidenceThe employee has to be able to demonstrate that no more than 500 kilometres have been driven on a calendar year basis for private purposes. This can be done by maintaining an accurate and verifiable trip log. It is then up to the tax inspector to prove that a trip log does not provide the evidence required, for example, because it has not been properly maintained (i.e. it is not reliable). The Supreme Court ruled against the tax inspector who made use of ANPR (Automatic Number Plate Recognition) camera footage which was inconsistent with the trips recorded. The highest court ruled that these ANPR images could not be used as counter evidence because there is no legal basis for the use of ANPR images. Therefore their use constitutes an impermissible breach of privacy.

What should you do?Before applying a nominal addition to income for the private use of a company car, first check whether an employee has actually been provided with a company car in the tax sense. Have you had discussions with the tax authorities about the acceptability of the trip logs provided? Rest assured that no ANPR material may be used against you.


19

7.1 | The Salary Costs (Incentive Allowances) Act

This legislation provides for a number of low income and wage cost benefits for employers:• the low income benefit (LIV) from 1 January 2017, when you

employee people on a salary of up to 125% of the statutory minimum wage. The employee should not have reached the age at which they are entitled to claim a State old-age pension (AOW) and must work at least 1248 paid hours in the calendar year (see below).

• the youth LIV, provided to compensate for the increase in the statutory minimum wage from 1 July 2017

• wage cost benefits (LKVs) for certain target groups of employees; provided you hold a ‘target group statement’:

- LKV for older employees entitled to claim unemployment benefit (aged 56 and over);

- LKV for disabled employees; - LVK for the target group covered by the employment targets

and quotas agreement and those under the age of 18 who are unable to follow or complete their education due to illness or disability;

- LKV for the re-deployment of people with an occupational disability.

7. Subsidies for employers and tax facility for employees of start-ups

The subsidies granted are:

LIV Average hourly rate in 2017 LIV per employee per paid hour Maximum LIV per employee per year

€9.82 - €10.82 €1.01 €2,000

€10.81 - €12.29 €0.51 €1,000

Youth LIV Age on 31 December 2017 Youth LIV per employee per paid hour Maximum youth LIV in 2018 per

employee per year

18 €0.23 €478.40

19 €0.28 €582.40

20 €1.02 €2,121.60

21 €1.58 €3,286.40

LKVDuration of LKV

Amount of LKV per paid hour

Maximum amount per employee per year

Older employee entitled to claim unemployment benefit 3 years €3.05 €6,000

Employee with occupational disability 3 years €3.05 €6,000

Target group covered by the employment targets and quotas agreement 3 years €1.01 €2,000

Re-deployment of people with an occupational disability 1 year €3.05 €6,000


Example

Tax period Hours worked Hours paid

Period 1 160 (152 contract hours + 8 ADV hours) 152 hours

Period 2 177 (152 contract hours + 8 ADV hours + 12 hours paid overtime + 5 hours unpaid overtime 164 hours

Period 3 0 (paid leave for entire tax period) 152 hours

Period 4 120 (152 contract hours + 8 ADV hours - 40 hours sickness) 152 hours

Period 5 0 (unpaid leave for entire tax period) 0 hours

How do you claim these low income and wage cost benefits?The Employee Insurance Administration Agency (UWV) pays these subsidies ‘automatically’ after the end of the calendar year on the basis of information in the policy administration. The policy administration extracts the data from your payroll accounting. It is therefore very important that all the relevant information has been correctly entered in the payroll accounting.

How do you obtain an LKV target group statement?Your older employee entitled to claim unemployment benefit can request a copy of this statement from the Employee Insurance Administration Agency (UWV) or the municipality. All other target group statements are issued by the UWV. Your employee can authorise you as the employer to apply for the statements on his or her behalf.

What are ‘paid hours’?The number of paid hours sets the amount of the low income or wage cost benefit. It is therefore important that the correct number of hours are included in your payroll accounting. Paid hours are the hours worked for which the employer pays wages. For example, you have a four-week tax period and an employee works 40 hours a week: 38 contract hours less 2 hours under the reduced working hours scheme (ADV).

The Tax and Customs Administration, the Employee Insurance Administration Agency (UWV) and Statistics Netherlands (CBS) have drawn up a handy memo on how the number of paid hours should be calculated. You can download this document here.

What should you do?Check whether you would be eligible for one or more wage cost benefits. Arrange for target group statements and instruct your payroll administrator on entering the correct information in the payroll accounting, including the correct number of paid hours.


7.2 | The Promotion of Research and Development Act (WBSO)

The Promotion of Research and Development Act (WBSO) - which provides for a remittance reduction for R&D - has existed in its present form since 2016. It is a key incentive instrument intended to promote investment in R&D. Having a stable investment climate is very important to the Netherlands. The scheme will not change much in 2018.

Reduction in WBSO parametersFurther to exceeding the WBSO budget in 2016, the available budget for this scheme in 2018 has been cut. The budget in 2018 will be €1,163 million. The percentage in the second band in 2018 has been lowered as a result from 16% to 14%. The percentage in the first band (32%) and the starters’ rate (40%) remains unchanged.

Changes in reporting on the implementation of the WBSO schemeA mandatory part of the WBSO scheme is reporting the number of hours actually spent on R&D and the costs and expenses incurred. The report must be submitted to the RVO (Netherlands Enterprise Agency) within three months of the end of the calendar year. Since 2016 it has been possible to report the hours spent and the costs and expenses incurred later in the calendar year in an R&D statement. You are then not restricted to the period covered by the R&D statement. However with two or three R&D statements in a calendar year it becomes more complicated to use an R&D statement for reporting. The administrative burden will now be reduced by making it possible to submit a combined report for all R&D statements issued in a given calendar year. This reduction in the administrative burden will take effect for the R&D statements issued for 2018 and therefore will apply only when reporting the number of hours spent on R&D at the start of 2019. However, no hours, costs or expenditure may be included in the

R&D remittance reduction Amount in 2017 Percentage in 2017 Amount in 2018 Percentage in 2018

For all R&D costs, maximum €350,000 32% €350,000 32%

For start-ups, on all R&D costs €350,000 40% €350,000 40%

On the surplus of all R&D costs 16% 14%


report that were incurred prior to the period covered by the R&D statement. This is because the WBSO scheme is for intended research and development work.

Will your company be undertaking research or development projects in 2018? The application must be submitted no later than one month before the month in which the R&D activities take place. An application should be for a minimum period of three months and a maximum period of 12 months and ends at the end of a calendar year. A company may submit a maximum of three applications. If the application is granted, the R&D remittance reduction may be deducted from the wage tax and national insurance contributions payable. The remittance reduction may only be applied in the wage period in which the decision from the RVO is received and should be deducted in equal amounts spread over the remaining wage periods relating to the R&D period concerned.

7.3 | Tax facility for employees of start-ups

Innovative start-up companies often do not have sufficient liquidity to be able to give employees salary increases or bonuses. Awarding share options is an alternative.

By awarding share option rights employees participate in the value creation of the start-up business. A change in the law promotes this type of employee participation. From 1 January 2018 a benefit gained from a share option scheme awarded by an innovative start-up will be 25% tax exempt up to an amount of €50,000. A maximum of €12,500 therefore will be excluded from the levying of tax. The conditions include:

• at the time of awarding the share options the employer held an R&D statement for starters; and

• the period between awarding the share option entitlement and its exercise is at least one year and no more than five calendar years; and

• the EU ceiling on state aid - referred to as ‘de minimis’ - is not exceeded.

This amendment to the legislation entered into force on 1 January 2018. The exercise period of at least 12 months (one year) and no more than five calendar years means that share options awarded before 2018 may also fall under this tax facility.


If you employ people in the Netherlands from outside the European Union there will also be some important changes in 2018.

8.1 | International trade relations

The government wants to make the way in which foreign nationals are admitted to the Dutch labour market more consistent with how international businesses operate, given that increasingly often they make use of flexible staff employed on a project basis. The detailed list of exemptions laid down in the regulations raises a multiple questions and provides companies with no certainty in advance.

Alongside the existing exemptions the International Trade Regulation entered into force on 1 July 2017. The purpose of the scheme is to make it easier for people who come to the Netherlands from outside the EU in the context of international trade relations to work here for a short period of time. For this category there is no question of displacement on the Dutch labour market. These could be employees who are to be trained in the use of new machinery or in order to provide training to the staff of a foreign customer of a Dutch company.

Under this regulation companies can inform the Employee Insurance Administration Agency (UWV) of their projects and activities in the context of their international operations, stating the positions for which an exemption to the work permit requirement is requested. The Employee Insurance Administration Agency (UWV) will assess in advance whether the positions in question can be filled by a Dutch employee or someone from another EU member state. If not, then it will no longer be necessary to obtain a work permit for these positions. Companies will then only have to report to the UWV when the employees in question actually start to do the work.

8.2 | Encouraging entrepreneurship

Further to a widening of the definition of employment status, since 1 April 2017 students, knowledge migrants and academic researchers have been given more room to set up a business. This provides them with the opportunity to start an own business alongside their normal activities. The measure is intended to retain more talent in the Netherlands from outside the EU.

8.3 | Services provided within the EU (WagwEU)

Under the Posted Workers in the EU (Working Conditions) Act (WagwEU) an employer based abroad that seconds employees to a Dutch business must meet the reporting and administration requirements. Failure to observe these can result in penalties imposed on the employer. The introduction of the reporting requirement under the WagwEU has been postponed. The aim now is that the reporting requirement will be introduced from 1 January 2019 depending on the availability of the digital reporting system. This will give your organisation more time to set up the necessary administrative procedures to meet this requirement.

8.4 | Coalition Agreement and labour migration

The Rutte III Cabinet will adhere to its policy that attracting talent from outside the European Union is desirable for the further development of the Dutch knowledge-based economy. Labour migration can help to strength the Netherlands’ competitive position. The present legislation related to residence permits for knowledge migrants and intra-company transfers is expected to remain unchanged.

8. What you need to know about work permits in 2018


8.5 | IND supervision of recognised sponsors

The Ministry of Security and Justice published its report Tussen handhaven en dienstverlenen [Between enforcement and service] in October 2017. This report indicated that the IND supervision of employers deemed as recognised sponsors is not effective enough. The IND has therefore decided to tighten up its monitoring and enforcement activities. In a letter to the Lower House of Parliament on 21 November 2017, Secretary of State Mark Harbers stated that the supervision will be tightened up. The IND will more strictly enforce the requirements relating to reporting, administration, appeals and duty of care, and issue a warning or impose a penalty when a recognised sponsor fails to meet these obligations. If multiple penalties are imposed on a

recognised sponsor this can lead to retraction of the employer’s status as a recognised sponsor. This means that the employer will no longer be able to apply for residence permits for knowledge migrants. You therefore need to make sure that you are fully aware of all your obligations as a recognised sponsor.

8.6 | Salary standard for knowledge migrantsKnowledge migrants (highly specialised or skilled personnel) are permitted to work in the Netherlands on the basis of their residence permit and do not need a work permit. Knowledge migrants are employees who are paid a certain minimum gross salary. The employer must also be registered with the Immigration and Naturalisation Service (IND) as a recognised sponsor.

The salary standards for 2018 are:

The amounts shown EXCLUDE the holiday allowance and thus are increased by 8% for the salary assessment in the knowledge migrants scheme.

Knowledge migrant General work permit Trainee work permit Short stay work permit

Employee under the age of 30 €3,229 €4,404 €3,229 €3,229

Employee over the age of 30 €4,404 €4,404 €3,229 €4,404

Graduates €2,314 N/A N/A N/A


9.1 | Faith in the future is a step back in time for employment law

According to the Rutte III Coalition Agreement the key to a fairer labour market lies in making a simultaneous shift in which permanent employment becomes less permanent and flexible working less flexible. The aim is to make employment contracts for an indefinite period the norm again and at the same time make them cheaper for employers. This should make longer term employment more attractive again, and making the right to terminate employment more flexible forms part of that package. Independent professionals will be given the room to do business, but bogus self-employment will be tackled.

9.2 | Return of the Salomon’s judgement and the subdistrict court formula

The courts need to have more room in which to freely reach a judgment when it can no longer reasonably be expected that an employer should continue an employment contract. This then sets aside the very strict approach of the Work and Security Act (WWZ) in which each of the separate grounds for dismissal put forward had to be sufficient for the termination to be accepted, as they could not be combined. At the request of the employer, the court can take into account all the circumstances of the case and still dissolve the employment contract where there is a seriously impaired working relationship, based on a combination of several (in themselves) insufficient reasons. This proposed legislation to some extent returns to the situation before the Work and Security Act, when the courts also had more freedom in this context.

To compensate for a combination of individually insufficient grounds for dismissal, the court can award an additional amount of up to half the Transitional Compensation (on top of the existing Transitional Compensation).

9.3 | More balance in the Transitional Compensation

Employees will be entitled to the Transitional Compensation right from the start of their employment relationship instead of only after two years. The question is, of course, what does this mean for short-term contracts where for the first two years employers did not have to pay a Transitional Compensation?

The calculation of the Transitional Compensation is 1/6 of the monthly salary for each full six month period worked and a 1/3 of a month’s salary for each full year, even where there is an employment history of more than 10 years. This means that no additional compensation will be awarded anymore for a long-term employment commitment.

The transition arrangements for the over 50s remain unchanged. The possibility of deducting training costs from the Transitional Compensation is to be widened. The present legislative proposal to compensate employers for the Transitional Compensation paid to sick employees further to a two-year period of sickness and the proposal to give employers room in a collective labour agreement to offer an alternative to the Transitional Compensation will be maintained. The transition arrangements for small employers (to pay the Transitional Compensation in instalments) will be widened and it will be possible to provide compensation in special circumstances, e.g. where a business is discontinued because of pension or sickness.

9. What you need to know about the changes to employment law in 2018


9.4 | Temporary contracts for temporary work

The maximum period within which three successive temporary employment contracts may be concluded will be extended from two to three years. This change brings us back to the situation as it existed before the Work and Security Act (WWZ).

The counter goes back to zero again if the intervening period between contracts is six months. The room to deviate from this and reduce the intervening period if this is required because of the nature of the work, will be widened. This is already the case for seasonal employment. Exceptions can also be made for repeated temporary work undertaken for a period of up to nine months. The social partners will make sector-by-sector agreements on this, and so this topic will no longer be entirely the minister’s responsibility. An exception to the successive contracts rule will be made for supply teachers providing sickness cover in primary education.

9.5 | Trial period

Another proposal concerns the possibility of extending the trial period. If an employer offers an employment contract for an indefinite period right from the start (as the first contract), then the trial period may be increased to five months. For longer contracts (more than two years) the trial period will be three months. In all other cases the trial period will remain the same as it is now.

9.6 | Payrolling

The Coalition Agreement states that payrolling as such will continue to be possible but it will be designed as an instrument to ‘relieve the burden’ on employers and not as an instrument that can be used to undercut employment conditions. The Cabinet will present a bill in which the less rigid employment law regime of the agency work employment contract (particularly the temporary employment clause) will be declared non-applicable. Employees must be treated at least the same in terms of their primary and secondary employment conditions as the employees of the hiring party. The Cabinet also intends to look at payrolling more closely in terms of bringing together formal and substantive employment. This may mean that a change in the definition of a temporary agency employment contract will also be open to discussion. Temporary work and secondment as such are not in question.

9.7 | Reducing the obligations related to continued payment of salary to sick employees

The new government also wishes to bring to an end the discussion surrounding the continued payment of salary to staff who are sick, particularly for small and medium-sized enterprises (SMEs). To encourage SMEs to take on more staff (on permanent contracts) again, the continued payment of salary for small employers (up to 25 employees) will be reduced from two years to one. The collective cost of the second year will be covered by a uniform contribution to be paid by smaller employers to finance this. The two-year ban on termination will remain in place. The period during which the differentiated contribution for WGA (Resumption of Work benefit) applies will also be reduced from ten to five years.


9.8 | More incentives in work disability insurance schemes to get employees back to work

It will be made more attractive for people receiving disability benefit under the WIA legislation to return to work. During the first five years of accepting a job, no assessment will be made of whether or not the earning potential of the individual resuming work has changed. Accepting work - even temporary or part-time work - will therefore not lead to uncertainty about the possibility of losing their entitlement to the benefit (should the job should be lost).

When people become unfit for work in the future and are entitled to benefit under the WIA legislation, more emphasis will be put on determining what work is suitable when establishing the degree of occupational disability (under the Assessment (Invalidity Insurance Laws) Decree (Sbaow)).

9.9 | Employment law changes in 2017 and 2018

• The Minimum Wage and Minimum Holiday Allowance Act (WML) changed from 1 July 2017. From the age of 21 young people are entitled to the full statutory minimum wage, and the statutory minimum youth wage for 18 to 20 year-olds also increased.

• From 1 January 2018 the Minimum Wage and Minimum Holiday Allowance Act was changed in connection with the decision that this legislation would also apply to agreements to provide services entered into after this date. This amendment to the legislation means that the statutory minimum wage also applies to people who perform paid work under an agreement to provide services (OVO), unless these are people who are deemed to be entrepreneurs for tax purposes.

• A bill has been submitted relating to compensation for the transition allowance paid by the Employee Insurance Administration Agency (UWV) in the event of redundancy for commercial reasons or after two years’ sickness. This will be funded through an increase in the standard unemployment insurance contribution (WW). The proposed amendment will have retroactive effect. The compensation scheme will also apply if the employment contract was terminated or discontinued on or after 1 July 2015 further to long-term occupational disability.


10.1 | Once again: the work-related costs scheme (WKR)

It is vital for all employers responsible for tax withholding that the tax-free WKR budget of 1.2% is monitored and managed using the correct procedures. We will report on a number of cases from which it has become apparent to us in the past year that these procedures are not always correctly applied in the work-related costs scheme.

Salary from current employment as opposed to salary from past employmentAll specific exemptions and the tax-free budget in the work-related costs scheme may be applied at the discretion of the employer where there is salary from current employment. This is the direct remuneration paid for the work performed, such as regular salary and a bonus. A study cost allowance (exempt), a company mobile phone (exempt under certain conditions) or a Christmas box (charged to the tax-free budget) are examples of salary from current employment which may be designated as final levy elements (work-related costs). The specific exemptions and the tax-free budget may be freely applied.

But with salary from past employment there is no choice. Designation as a work-related cost is mandatory and applies to only two forms of salary: 1) personnel discounts, and ii) employment benefits which are also extended to employees receiving salary from current employment (specific example: the Christmas box given to retired staff). All other allowances and employment benefits that constitute salary from past employment may not be designated as work-related costs and become mandatory ‘payslip’/individual salary.

Outplacement costs The allowance or employment benefit granted for outplacement in the context of terminating the employment contract is an exception to the above. This is salary from past employment which, in principle, may not be designated as a work-related cost

and for this reason also cannot benefit from the specific exemption for outplacement. The State Secretary for Finance however has given approval for this to be designated as a work-related cost provided that outplacement was offered while the employee was still employed.

Allowance to cover an employee’s legal costs in the context of dismissalThis allowance constitutes salary from past employment and therefore cannot be designated as a work-related cost under the legislation. The tax authorities however will allow you to designate the payment as final levy salary provided you pay this allowance together with salary from current employment. It must meet the customary criterion, however.

D&O liability insuranceThe Tax and Customs Administration had adopted the position nationally that the insurance premium paid for directors’ liability insurance constitutes salary from current employment that may be designated as a work-related cost. The entitlement to any insurance paid out, in their view, however, constitutes a taxable claim. The result of a taxable claim is that in the (hopefully unnecessary) event that the insurance is paid out, it then falls outside the scope of the definition of salary and is therefore tax free. If the employer reimburses a director for the cost of the premium paid for a liability insurance concluded privately, this would constitute taxable salary.

Please note!The foregoing differs from a collective liability insurance which an employer enters into for all the employees in the event that in performing the tasks of their employment they should cause damage, loss or injury to third parties. Employers are liable for such damage caused by ‘subordinates’ under Section 6:170 of the Dutch Civil Code (BW). The premium paid for such a liability insurance is an employer’s cost and, in our view, does not constitute employee salary.

10. Other items


The health and safety exemptionThe work-related costs scheme includes a specific exemption for facilities directly arising from the working conditions policy adopted by the employer under the Working Conditions Act. A course to stop smoking, a flu jab or a First Aid course are standard examples of such. But are there other things which could also be included? Such as psychological counselling, yoga classes, a dietician or sport on the recommendation of the company medical officer and under the supervision of a qualified coach? The answer to this question depends on the nature and scope of your Working Conditions policy.

What should you do?If you are considering introducing a vitality programme to support the long-term employability of your personnel, then you should include that programme in writing in your Health and Safety Plan.

Work-related costs include VATIf you want to check the total amount of your work-related costs against your tax-free budget of 1.2% you will not be able to simply see that amount from your financial accounting if the costs have been entered there without the VAT. You will then have to increase the amount of the work-related costs by the VAT percentage that has been deducted, i.e. 0%, 6% or 21%. It is possible to make an agreement with the tax inspector on a single (average) mark-up percentage.

What should you do?The work-related costs scheme with the risk of an 80% remittance on the amount by which the tax-free budget of 1.2% has been exceeded, should be continually monitored. What work-related costs may and may not be used for this budget? Ensure that the work-related cost procedure is correct, train those of your staff who come into contact with the work-related costs scheme and every year take random samples to check that your WKR procedures are correct and complete.

10.2 | For public and semi-public sector employers: the WNT in 2018

The new general Senior Officials in the Public and Semi-Public Sector (Standards for Remuneration) Act (WNT) remuneration maximum for 2018 has been set at €187,000 (was €181,000). For senior officials who do not have an employment contract the maximum remuneration standards are:

• €25,300 for the first six months (was €24,500); • €19,100 for the second six months (was €18,500); • always with a maximum hourly rate of €182 (was €176).

10.3 | Further increase in the pensionable age for the State old-age pension (AOW)

The age at which you were originally entitled to a claim a State old-age pension was 65 years. This now rises every year and will be 66 years of age from 1 January 2018. The future increases will be:

• 66 years and four months in 2019;• 66 years and eight months in 2020;• 67 years in 2021;• 67 years and three months in 2022;• no increase in 2023.

From 2022 the pensionable age will be linked to life-expectancy. Because life-expectancy has risen further, the pensionable age will be raised again by three months in 2022. It has been decided not to raise the age from 67 years and three months from 2023. Any further increases after 2023 will be announced five years in advance.

You can go to the website of the Social Security Insurance Bank (SVB) to see what your expected pensionable age will be:

• born in 1960: 67 years and nine months;• born in 1970: 68 years and three months;• born in 1980: 70 years and six months;• born in 1990: 71 years and six months.


10.4 | Increase in standard retirement age

That age at which a State old-age pension (AOW) may be claimed in 2018 is 66 years of age. The standard retirement age will be two years more in 2018 (68 years) and was one year more until the end of 2017 (67 years). This standard retirement age says nothing about the age at which you can or should retire, but provides a tax-related parameter for the degree to which pension can be accrued tax free. The higher the standard retirement age, the lower the tax-facilitated pension if the pension date set in the pension scheme regulations is before reaching the age of 68.

What should you do?Have your pension provider confirm that your employees’ pension rights accrual from 2018 meet all the tax regulations.

10.5 | 2018 contribution percentages for Sector Funds and proposal in Rutte III Coalition Agreement

As an employer your business will be assigned to a certain sector and this classification determines the amount of the sector fund contribution which is payable. The sector fund contributions in 2018 show the following pattern relative to 2017:

• The average sector contribution in 2018 will be 1.28% and is thus 0.08% lower than the average sector contribution in 2017.

• The sector contribution will drop for 45 sectors and increase for 14 sectors. The contribution will remain unchanged for three sectors.

• The five biggest contribution reductions range from -/- 1.97 percentage points to -/- 2.78 percentage points. These are relatively small sectors such as Sector 56 Schildersbedrijf (painters and decorators) and Sector 58 Dakdekkersbedrijf (roofers).

• The five largest contribution increases (up by 0.45 percentage points to up by 2.48 percentage points) are found in Sector 45 Zakelijke dienstverlening III (business services III), Sector 38 Banken (banking) and Sector 51 Algemene Industrie (general industry), among others.

The business services III in Sector 45 - where contributions will increase in 2018 - also includes bookkeeping and financial administration businesses and housing associations. The general industry in Sector 51 covers seven types of industrial activities, such as the paper and paper processing industry, the medical pharmaceutical industry and the clothing industry.

What should you do?Do you want to know whether your organisation will save on sector fund contributions in 2018 or be faced with increased personnel costs? Check the amount of your sector contribution in 2018 and determine whether your sector classification is still correct.

Rutte III Coalition AgreementThe new Cabinet will look into whether the present contribution differentiation per sector could be replaced by a contribution which depends on the length of the employment contract. For contracts entered into for an indefinite period a lower contribution would apply than for temporary contracts. This would provide an incentive to employers to offer permanent employment contracts sooner.

10.6 | Private top-up of WW and WGA contributions

Since 1 January 2016 the maximum duration of the unemployment benefit (WW) and the wage-related resumption of work benefit (WGA) has been set at 24 months, excluding the transition arrangements. Through the Stichting van de Arbeid (Employment Organisation) employers’ and employees’ organisations have entered into agreements on the private top-up of these benefits to last for up to 38 months.

This private supplementation will be laid down in sector-wide collective labour agreements (CAOs) that have been declared generally binding. Sector-wide CAOs cover both company CAOs and branch CAOs. The additional benefits will not be paid by the Employee Insurance Administration Agency (UWV) but by a private organisation, the Stichting Private Aanvulling WW and WGA (Stichting PAWW) (Private top-up of unemployment and work resumption benefits organisation).

FundingThe contributions for these supplementary private benefits will be borne entirely by the employee. They are tax deductible and for the employer reduce the salary subject to contributions for employee insurances and the income-related health insurance contribution. The pensionable salary provides the base for these contributions (fixed salary and fixed supplements). The base for this therefore deviates from the contribution base for employee insurances and the income-related health insurance contribution. The maximum contribution base is the same as the maximum contribution base for employee insurances and the income-related health insurance contribution (€54,614 in 2018).


The same insurance contribution for all sectors has been estimated at 0.3% (2018), 0.4% (2019 and 2020), 0.5% (2021) and 0.6% (2022).

Employer’s requirementsThe contributions for this private unemployment and resumption of work benefits top-up must be withheld from your employees (gross salary) and remitted to the Stichting PAWW. You are also required to inform your employees in writing or electronically before 1 December about the amount of the contribution, and new staff no later than on the date of joining the organisation.

Which branches?At the time of preparing this brochure it was not yet known which company and branch CAOs would be included in a collective CAO. You could check with your employer’s organisation. You can read more about the scheme on the website of the Stichting PAWW.

10.7 | Current status of the WagwEU

The Posted Workers in the EU (Working Conditions) Act (WagwEU) follows on from a European Directive on the posting of workers in the context of providing services and entered into force on 18 June 2016. One of the obligations that this legislation imposes on foreign service providers is an electronic reporting requirement if they provide personnel to work in the Netherlands. A lot of information must be reported and the Dutch recipient of the service is required to check that it is correct and report any inaccuracies. Initially it was envisaged that this digital reporting requirement would be introduced from 1 January 2018. We have been notified by the Ministry of Social Affairs and Employment that the reporting system is still in development and is unlikely to be operational before 1 January 2019.

Agreement was reached in the European Union on 23 October 2017 that the posting directive would be tightened up. Personnel and temporary staff posted in the EU will have more rights in terms of payment for their employment in accordance with the rules of the EU State in which the work is actually carried out. The period of posting (or secondment) will be limited to one year (12 months) with an option to extend this by six months. EU Member States must enact this amended Directive on posted workers in their national legislation within three years and it should enter into force no later than one year later.

10.8 | For payroll administrators: the calculation of employee insurance contributions and the health insurance contribution using the advanced cumulative calculation (VCR) method

For some payroll administrators it is a piece of cake; others may find it not entirely clear. That is why we have provided a brief explanation of the ‘advanced cumulative calculation system’ (VCR) and the method to be used in the wage periods regime.

Employers are only liable for the employee insurance contributions and income-related health insurance contribution (ZVW) on salary that is paid where there are wage periods. If there is no wage period in a contribution year, then no employee and health insurance contributions are payable either. This can occur when salary is paid later after the year end.

An example• an employee paid a monthly salary leaves the company on

30 November 2017;• a bonus is paid later in January 2018.

No employee and health insurance contributions are payable on this bonus because there is no wage period in 2018.

What is a wage period?A wage period is a period of time (e.g. day, week, four weeks, month, quarter) over which the employee receives his or her regular (periodic) salary. In the example given, no regular monthly salary is paid in 2018 and therefore there is no wage period in 2018 and no contributions are payable.


What is the progressive cumulative calculation system (VCR)?This means that within a contribution year - which does not go beyond the year-end - the employee and health insurance contributions are cumulatively calculated (or recalculated) in every wage period. For example, the employee and health insurance contributions for the month of August are calculated on the total salary paid up until August without deducting what has already been paid up to the end of July. If this this method is used then employee and health insurance contributions may well be payable on salary paid later in the year in which the employment ends.

An example• an employee paid a monthly salary leaves the company

on 31 August 2018;• a bonus is paid later in October 2018.

Employee and health insurance contributions will be payable on this bonus where the VCR method is used, unless the contribution maximum is or will be exceeded. There will have been eight wage periods and the contribution maximum in 2018 is 8/12 x €54,614 = €36,409. Insofar as the salary paid up until the end of August does not reach this maximum, employee and health insurance contributions will be payable on that part of the bonus paid in October 2018.

Further details? You can download the brochure ‘Loonberekening voortschrijdend cumulatief rekenen (VCR) en loontijdvakkensystematiek’ [Salary calculation using the progressive cumulative calculation system (VCR) for the wage periods regime] from the website of the Tax and Customs Administration.

10.9 | What the use of robots could mean in terms of your salary and personnel administration

Robotic Process Automation (RPA) is often used when payroll accounting is automated. Here a ‘robot’ takes over repetitive (standard) activities from people.

RPA is not a physical robot but software which operates as a virtual co-worker to support processes. The RPA does not replace the existing HR or payroll software, as such, but can

work with existing systems and processes. This means that no major investment is needed to replace the existing HR or payroll systems. The robot software can take over basic human tasks and reduce the time spent on these tasks and therefore the cost.

RPA is very useful in supporting processes in which large volumes of data are processed. RPA software can perform the following tasks:

• extracting data from Excel files or systems;• generating reports;• copying data;• checking data;• reading, processing and sending e-mails;• entering data into HR or payroll systems;• prefilling forms on the basis of information available

elsewhere.

Typical HR and payroll areas where RPA can provide support include:

• complex processes which involve multiple steps and which depend on multiple systems (such as the on-boarding and off-boarding of personnel);

• labour-intensive and repetitive processes - such as the repeated entry of similar data - based on certain rules (e.g. payroll accounting).

• processes in which people are constantly having to deal with data processing errors (e.g. differences between HR data and the payroll accounting).

10.10 | Change in maximum tax rate

The maximum tax rate of 52.00% is reduced to 51.95% effective as of 1 January 2018. This results in a grossed-up final levy rate of 108.1% (previously 108.3%). The reduction of the maximum rate does not affect the punitive levy of 52.00% applicable for an early retirement scheme (‘RVU’). The tax rate for anonymous employees also remains 52.00%, however for practical reasons the reduced rate of 51.95% may be applied in 2018 only.


Payroll and income tax percentages for 2018

Social security contributions 2018

Tax credits in 2018

Valuation criteria for the work-related costs scheme in 2018

Final levy and other special rates in the payroll tax in 2018

Other figures

AppendixFigures for 2018

01

02

03

04

05

06


* A slightly different second tax band threshold applies to people born in 1945 or earlier. The rates are however the same.

1. | Payroll and income tax percentages for 2018

Table 1.1 relates to people who have not yet reached pensionable age (66 years in 2018) while table 1.2 applies to people who have reached this age. For comparison we have included the figures for 2017.

Table 1.1 Tax rates for people who have not yet reached pensionable age (AOW)

Taxable income of more than

but less than Tax rate National insurance contribution rate

Total rate Tax levied on total amount of the tax bands

€ € % % % €

- 20,142 8.90 27.65 36.55 7,361

20,142 33,994 13.20 27.65 40.85 13,019

33,994 68,507 40.85 40.85 27,118

68,507 51.95 51.95

2018




€ € % % % €

- 19,982 8.90 27.65 36.55 7,303

19,982 33,791 13.15 27.65 40.80 12,937

33,791 67,072 40.80 40.80 26,515

67,072 52.00 52.00

2017




€ € % % % €

- 20,142 8.90 9.75 18.65 3,756

20,142 33,994 13.20 9.75 22.95 6,935

33,994 68,507 40.85 40.85 21,033

68,507 51.95 51.95

2018




€ € % % % €

- 19,982 8.90 9.75 18.65 3,726

19,982 33,791 13.15 9.75 22.90 6,888

33,791 67,072 40.80 40.80 20,466

67,072 52.00 52.00

2017

Table 1.2 Tax rates for people who have reached pensionable age (AOW) (born in 1946 or later*)


2. | Social security contributions 2018

Table 2.1 Contribution percentages for national insurances and employee insurances in 2018

Table 2.2 Healthcare insurance contributions (ZVW) 2018

Contribution Employer Employee Total Maximum wage subject to contributions in 2018

Maximum wage subject to contributions in 2017

% % % € €

State old-age pension (General Old Age Pensions Act, AOW)

- 17.90 17.90 33,994 33,791

Surviving Dependants Act (ANW) - 0.10 0.10 33,994 33,791

Long-term Care Act (WLZ) - 9.65 9.65 33,994 33,791

Total national insurance contributions - 27.65 27.65 - -

Employee insurances:

* Basic contribution WAO (Occupational Disability (Insurance) Act /WIA (Work and Income (Fitness for Work) Act

6.27 - 6.27 54,614 53,701

* Employers’ contribution for child care 0.50 - 0.50 54,614 53,701

* Work resumption fund contributions (average)

1.16 - 1.16 54,614 53,701

* Unemployment insurance contribution (WW)

2.85 - 2.85 54,614 53,701

* Sector fund contribution (average) 1.28 - 1.28 54,614 53,701

* Implementation Fund for Government Agencies (UFO)

0.78 - 0.78 54,614 53,701

Contribution Maximum wage subject to contributions in 2018

Contributions in 2017

€

Income-related contribution (employers’ mandatory contribution)

6.90% 54,614 6.65% over a maximum of €53,701

Employee’s income-related contribution (without employers’ mandatory contribution)

5.65% 54,614 5.40% over a maximum of €53,701


3. | Tax credits in 2018

There will be six different types of tax credit in 2018, four of which have been included in the payroll tax tables:• General tax credit• Employed person’s tax credit• Elderly person’s tax credit• Single elderly person’s tax credit

There are two types of tax credits which you have to calculate and apply yourself:• Young disabled person’s tax credit• Life-course leave tax credit (no further accrual after 2011)

Table 3.1 Tax credits in 2018

Tax credit Younger than pensionable age (€) As off pensionable age (€)

2018 2017 2018 2017

General tax credit (income related)

• maximum 2,265 2,254 1,157 1,151

• minimum 0 0 0 0

Employed person’s tax credit (income related) m

• maximum 3,249 3,223 1,659 1,645

• minimum 0 0 0 0

Earned income tax credit (income related)

• maximum Lapsed 1,119

• minimum

Elderly person’s tax credit (low incomes) 1,418 1,292

Elderly person’s tax credit (high incomes) 72 71

Single elderly person’s tax credit 423 438

Young disabled person’s tax credit 728 722

Life-course savings scheme tax credit (per year of participation until end 2011)

212 205


4. | Valuation criteria for the work-related costs scheme in 2018

The following standard amounts will apply in 2018:

• Specific exemption for commuting and business travel: maximum €0.19 per kilometre (2017 and 2018).

• Meals at the workplace where there is no attendant business interest: €3.35 (€3.30 in 2017) per free meal. No distinction is made regarding the type of meal (i.e. lunch or dinner, warm or cold). Refreshments provided at the workplace have a zero valuation.

• Certain forms of accommodation and lodging: €5.55 (€5.50 in 2017) per day.

• Allowance for refurnishing in the event of a move for business purposes: maximum €7,750 (2017 and 2018). There is also a specific exemption for the actual cost of moving the inventory and equipment.

• Volunteer scheme: maximum €150 per month and €1,500 per year (2017 and 2018).

• Company products (personnel discounts): 20% of the commercial value with a maximum of €500 per year (2017 and 2018).

No standard has been set for the benefit of an interest-free or low interest personnel loan - including to finance an own home. The benefit of interest-free or low interest personnel loans is set at the commercial value, i.e. the difference between the interest paid compared with the market rate for the loan concerned. The benefit of an interest-free loan for the purchase of a bicycle, an electric bicycle or an electric scooter is tax free.

Income 2017 2018 2018

(in euros) is was will be

10,000 361 400 359

20,000 3,192 3,103 3,166

30,000 3,223 3,013 3,249

40,000 2,951 2,864 2,977

50,000 2,591 2,464 2,617

60,000 2,231 2,064 2,257

70,000 1,871 1,664 1,897

80,000 1,511 1,264 1,537

90,000 1,151 864 1,177

100,000 791 464 817

110,000 431 64 457

120,000 71 0 97

130,000 0 0 0

Table 3.2 Overview of reduction in employed person’s tax credit 2017 - 2018


5. | Final levy and other special rates in the payroll tax

Final levy rates (%) 2018 2018 2017 2017

Grossed up Standard Grossed up Standard

Contractors, home workers, sex workers and similar occupations

• with tax credit

• without tax credit9.80

56.20

9.00

36.00

9.80

56.20

9.00

36.00

Anonymous employees 108.10 51.95 108.30 52.00

Non-anonymous employees, younger than pensionable age, dependent on annual salary

57.60

69.00

108.10

36.55

40.85

51.95

57.60

68.90

108.30

36.55

40.80

52.00

Non-anonymous employees of pensionable age, dependent on annual salary

22.90

29.70

69.00

108.10

18.65

22.95

40.85

51.95

22.90

29.70

68.90

108.30

18.65

22.90

40.80

52.00

Anonymous employees 108.10 51.95 108,30 52.00

Continuous and alternately shared use of a delivery van by two or more employees

€300 per year €300 per year

Table 5.3 Different rates for special groups of employees

Pseudo-final levies (%) 2018 2017

Early retirement schemes (RVU) 52% 52%

Excessive severance packages 75% 75%

2018 2017

Artists and professional athletes

• resident in the Netherlands

• resident in a treaty country

• resident in a non-treaty country

36.55%

20.00%

20.00%

36.55%

20.00%

20.00%

Contractors, home workers, sex workers and similar occupations

• with tax credit

• without tax credit

9.00%

36.00%

9.00%

36.00%

Table 5.2 Pseudo-final levy rates

Table 5.1 Final levy rates


6. | Other figures

2018 2017

Minimum customary salary for shareholders with a substantial interest €45,000 €45,000

Minimum customary salary for starters Statutory minimum wage

(approx. €20,000)

Statutory minimum wage

(approx. €20,000)

Pseudo-final levy for severance packages in excess of €544,000 €540,000

Maximum pensionable salary €105,075 €103,317

2018 2017

Post-graduates (holding a master’s degree, who are either studying for or hold a PhD) under the age of 30

More than €28,350 More than €28,125

Certain groups of academics/research fellows and medical trainees (in specialist training) No salary standard No salary standard

Other staff More than €37,296 More than €37,000

Income thresholds for 30% facility

Certain salary standards (i.e. taxable salary) apply for incoming employees with scarce specific expertise.


Regio Amsterdam

Regio Rotterdam/Den Haag

Johan Bos [email protected] Phone: +31 (0)88 407 11 14

Vivaldistraat 150 1083 HP Amsterdam

Marcel de Vreede [email protected] Phone: +31 (0)88 407 37 67

Wassenaarseweg 80 2596 CZ Den Haag

Wouter van Heyningen [email protected] Phone: +31 (0)88 407 89 49

Boompjes 258 3011 XZ Rotterdam

Jan-Bertram Rietveld [email protected] Phone: +31 (0)88 407 83 22


Peter Sassen [email protected] Phone: +31 (0)88 407 83 16


List of contacts for the People Advisory Services (PAS) Practice Group of Ernst & Young Belastingadviseurs LLP

Antoine Brons [email protected] Phone: +31 (0) 88 407 30 14

Vivaldistraat 150 1083 HP Amsterdam


Regio Noord Oost (Zwolle/Arnhem/Utrecht)

Regio Zuid (Eindhoven/Venlo/Maastricht)

Renzo van der Ham [email protected] Phone: +31 (0)88 407 63 22

Meander 861 6825 MH Arnhem

Hans Verborg [email protected] Phone: +31 (0)88 407 63 69


Emanuel op het Veld [email protected] Phone: +31 (0)88 407 61 46


Miriam Michiels [email protected] Phone: +31 (0)88 407 45 51

Prof. Dr. Dorgelolaan 12 5613 AM Eindhoven

Theo van Schendel [email protected] Phone: +31 (0)88 407 34 96

Weert 11 6222 PG Maastricht

Ilse Jansen ilse [email protected] Phone: +31 (0)88 407 83 24

Prof. Dr. Dorgelolaan 12 5613 AM Eindhoven


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