Payroll tax in 2018 and 2019 - Tax, social security law and employment conditions for national and international employers and employees - EY
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Payroll tax in 2018 and 2019 Tax, social security law and employment conditions for national and international employers and employees.
Payroll tax in 2018
and 2019
Tax, 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certain information may become outdated or is no longer accurate.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.
1 Payroll tax in 2018 and 2019
Introduction
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 independents
For 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.
De loonheffingen in 2018 en 2019 2
Contents
1. The main headlines at a glance 5
2. From VAR via BGL to DBA and back to BGL again 6
2.1 The DBE legislation: first deferral
2.2 The Rutte III Coalition Agreement: one of these days becomes none of these days
2.3 What you should (and should not) do in 2018
3. Penalty levies in payroll tax: update 8
3.1 The early retirement scheme (RVU) penalty levy of 52%
3.2 The 75% punitive levy on excessive severance packages
4. International payroll tax 10
4.1 The new social security treaty with China
4.2 Social security in the EU/EEA
4.3 The future of the 30% facility
4.4 Cross-border employee tax credits in 2019
4.5 Staff recruited abroad
5. Payroll tax for directors and supervisory directors 14
5.1 Company directors
5.2 Supervisory directors and other supervisory officers
5.3 Directors of associations, societies and foundations
6. The company car from 2017 16
6.1 The company car or van brought later than 2017
6.2 The company car or van bought before 2017
6.3 Changing company cars
6.4 The Tesla tax
6.5 Making a company car available and providing counter evidence
7. Subsidies for employers and tax facility for employees of start-ups 19
7.1 The Salary Costs (Incentive Allowances) Act
7.2 The Promotion of Research and Development Act (WBSO)
7.3 Tax facility for employees of start-ups
3 Payroll tax in 2018 and 2019
8. What you need to know about work permits in 2018 23
8.1 International trade relations
8.2 Encouraging entrepreneurship
8.3 Services provided within the EU (WagwEU)
8.4 Coalition Agreement and labour migration
8.5 IND supervision of recognised sponsors
8.6 Salary standard for knowledge migrants
9. What you need to know about the changes to employment law in 2018 25
9.1 Faith in the future is a step back in time for employment law
9.2 Return of the Salomon’s judgement and the subdistrict court formula
9.3 More balance in the Transitional Compensation
9.4 Temporary contracts for temporary work
9.5 Trial period
9.6 Payrolling
9.7 Reducing the obligations related to continued payment of salary to sick employees
9.8 More incentives in work disability insurance schemes to get employees back to work
9.9 Employment law changes in 2017 and 2018
10. Other items 28
10.1 Once again: the work-related costs scheme (WKR)
10.2 For public and semi-public sector employers: the WNT in 2018
10.3 Further increase in the pensionable age for the State old-age pension (AOW)
10.4 Increase in standard retirement age
10.5 2018 contribution percentages for Sector Funds and proposal in Rutte III Coalition Agreement
10.6 Private top-up of WW and WGA contributions
10.7 Current status of the WagwEU
10.8 For payroll administrators: the calculation of employee insurance contributions and the health insurance
contribution, the wage periods system and the progressive cumulative calculation (VCR) system
10.9 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
1. The main headlines at a glance
To start with here is a brief overview of the most important • Company cars continue to be a payroll tax headache. In Section
news in the area of payroll tax and employment conditions in 6 you can read what the transition arrangements for the
2018 and 2019. Elsewhere in this brochure you can read more Memorandum on Vehicles II (Implementation) Act provide for
about these topics. and the impact of the ‘Tesla tax’.
• Prepare yourself for the new legislation that has been • In Section 7 we have brought together a number of subsidy
announced concerning whether freelancers and independents opportunities for employers. We also include details of how
are employed or not and the new obligations when entering these affect your payroll accounting.
into contracts with them. We have set this out in Section 2
along with what you should (and should not) do in 2018. • Besides tax and social security legislation changes in 2018,
civil law changes in 2018, such as changes to provision law
• There are two payroll tax penalty levies which employers may and concerning work permits, will also affect your employment
be liable for. These are the 52% punitive levy on banned early policy. See Sections 8 and 9 for an update.
retirement schemes and the 75% punitive levy on excessive
severance packages. Has your organisation been affected by • A new trend: automation is being supplemented by the use of
these penalty levies? Then see Section 3. robots. You can read about the cost savings that this could
bring in Section 10.9.
• 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.
5 Payroll tax in 2018 and 2019
2. From VAR via BGL to DBA and back to BGL again
2.1 | The DBE legislation: first deferral Secretary for Finance believes that the number of cases of
‘malicious intent’ will be very small. To be deemed as such you
Is the freelancer or self-employed person you have hired must already have quite a bad record. The State Secretary
really a business owner or actually a (notional) employee? considers organisations making use of freelancers to be of
Every commissioning client has to ask this very important ‘malicious intent’ only where there is deliberate fraud or
question because qualification as a ‘notional’ employee has deception involved. This could include situations involving
major financial consequences. The client is then deemed to deceit, forgery, or collusion, or situations which lead to unfair
be the employer and required to remit all applicable payroll competition, economic or social disruption or where there is
taxes. If the client fails to comply with remittance requirements, the risk of exploitation. You can judge for yourself whether
then supplementary tax assessments with interest and possibly this description would apply to your organisation!
penalties too, may follow.
The Exemption from Payroll Tax Withholding
The VAR system (VAR: Statement of Employment Relationship) (Implementation) Act (BGL)
eliminated this uncertainty in advance but since 1 May 2016 There was another bill put forward prior to the DBA legislation.
the VAR has been replaced by the Assessment of Employment This was the Exemption from Payroll Tax Withholding
Relationships (Deregulation) Act (DBA). The DBA legislation (Implementation) Act (BGL). This bill failed to be adopted.
centres on model agreements published by the Tax and Customs It envisaged using a web module - based on the British example
Administration which are intended to clarify the status of the - to apply for a decision stating that the self-employed person
freelancer as either an independent business owner or an was not an employee on the basis of which the client would be
employee. In practice it became clear that this approach did indemnified from the withholding and remittance of all payroll
not work and the DBA legislation caused a great deal of taxes. Based on the plans of the new Cabinet it is likely that the
uncertainty and concern. Clients stopped using the services of principle behind the BGL legislation will return.
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
Payroll tax in 2018 and 2019 6
2.2 | The Rutte III Coalition Agreement: one of way as the previous concept that formed part of the Exemption
these days becomes none of these days from Payroll Tax Withholding (Implementation) Act (BGL).
The new government has recognised that the DBA legislation Entrepreneurship agreement?
offered no solution to the problem of bogus self-employment and The government intends to investigate whether and how
that it has actually caused considerable disruption. The Assessment independent business owners can be incorporated into the Dutch
of Employment Relationships (Deregulation) Act (DBA) has Civil Code through the introduction of an entrepreneurship
therefore been shelved. The new legislation must provide those agreement. This could help to clarify and strengthen the position
who are really self-employed and their clients with certainty that of independents.
there is no employment situation involved, on the one hand,
and prevent bogus self-employment, on the other hand. Flaws
There are two flaws in this solution to the problem of actual and
We anticipate that the new bill will be submitted to parliament bogus self-employment envisaged by the new Cabinet. The first
during the course of 2018 and possibly enter into force from lies in the distinction between performing work which either is or
1 January 2019. Following the introduction of the new legislation is not part of the client’s normal business activities. In practice,
the tax authorities will pursue a policy of limited enforcement this distinction will not always be clear and give rise to discussion.
(i.e. no penalties further to a first inspection) and adopt mainly A second point is the three-tier classification of the self-employed
a coaching role. This is intended to help the parties involved for tax purposes into 1) real independents charging a high hourly
with the application of the new legislation. This transition period rate; 2) the bogus self-employed on a low hourly rate; and 3) an
is essentially a further extension of the present period in which in-between category. This three-way division still fails to address
the Tax and Customs Administration has not been enforcing the the issue of determining whether or not the contract is one of
Assessment of Employment Relationships (Deregulation) Act employment under civil law with the attendant consequences.
(DBA) - except in cases of ‘malicious intent’. Only after the Dutch Civil Code has been amended - perhaps
to include an entrepreneurs’ contract - civil labour law will be
Based on the Rutte III Coalition Agreement the new legislation brought into line with the tax treatment of the self-employed.
will take the following form in outline:
At the lower end of the market 2.3 | W
hat you should (and should not) do in 2018
Where self-employed people work for a low hourly rate and for a
longer contract period (more than three months), or in combination In the Rutte III Coalition Agreement the new government has
with performing regular business activities, then they will always announced that the new legislation will include an implementation
be deemed as working on the basis of an employment contract. period of no more than a year. During this period - provided you
An hourly rate of less than €15/18 has been mentioned. are not of malicious intent - you need not fear the imposition of
supplementary assessment with interest and penalties.
At the upper end of the market
Where a high hourly rate applies (more than €75 per hour) together We will have to wait until the new bill is submitted to parliament
with a shorter contract period (less than a year) or in combination and what statutory provision is ultimately published in the Bulletin
with not performing regular business activities, then the self- of Acts and Decrees. Should you do nothing until then? Until 1
employed person may be excluded from the payroll tax regime January 2020 or possibly even later? No. We recommend that you
(opt out). review your present contracts with freelancers - and particularly
the duration and nature of the work (regular and other business
In-between category activities) - in light of the anticipated new legislation. It has been
A ‘client statement’ will be introduced for self-employed people announced that a distinction will be made between contracts
charging more than the low rate. This will provide the hiring shorter or longer than three months (for regular business activities)
party with clarity and certainty when contracting the services and shorter or longer than a year (for other activities). So you can
of self-employed professionals and contractors. The client will prepare in advance of the new legislation. Where necessary you may
be issued with this statement after completing the web module. conclude an agreement to provide services with your freelancers
This client statement will indemnify the client by providing and other self-employed contractors, possibly based on one of
certainty in advance that payroll tax and employee insurance the model contracts published by the Tax and Customs
contributions do not have to be withheld and remitted (unless Administration. These agreements to provide services must
the questions in the web module have not been answered exclude the use of any form of notional employment. We will,
truthfully). This client statement essentially works in the same of course, keep you fully informed of all political developments.
7 Payroll tax in 2018 and 2019
3. Penalty levies in payroll tax: update
3.1 | The early retirement scheme (RVU) penalty 2. the arrangements that you make can be deemed as an actual
levy of 52% pension scheme;
Making older employees redundant can have the consequence 3. the employee is dismissed for objective reasons, such as a
that you as the employer have to pay a punitive levy of 52% on dysfunctional performance, character incompatibility or in the
the value of the redundancy scheme. This penalty is imposed if context of a business reorganisation in which the proportionality
the severance package you agree with your employee(s), qualifies principle is applied (also known as the qualitative test);
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 4. the employee receives a severance payment in the period
much more heavily taxed. between the date of redundancy and the two-year period prior
to reaching the age at which they are entitled to claim a State
Voluntary employee exit/replacement schemes old-age pension (AOW) or an earlier pension date, who can
The Supreme Court is currently considering the question of finance an income of no more than 70% of the last salary earned,
whether an early retirement scheme can be said to exist in the taking into account any other income such as unemployment
event of collective redundancy for the purpose of a business benefit (WW), a pre-pension scheme or a life-course savings
reorganisation (the position adopted by the tax authorities), payments (also referred to as the qualitative test).
if the employees designated as surplus on the basis of the
proportionality principle ‘are permitted’ to swap places with Step-by-step plan
older colleagues who have volunteered to leave the company. If you are considering letting go of one or more older employees,
The consequence of this may well be that relatively more older always check in advance that the severance scheme does not
people will be made redundant than younger colleagues. If this qualify as a banned early retirement scheme. You can follow this
remains within a margin of 10%, then the Tax and Customs step-by-step plan:
Administration is willing to accept that it is not an early retirement
scheme. Where this margin is exceeded then it is deemed to be • Look at what options there are to start working part-time.
an early retirement scheme subject to the punitive levy according If the employee actually continues to work for at least 50% of
to them. A Court of Appeal has ruled against the tax authorities. their original working hours, then a salary top-up is not an
The Supreme Court still has to issue its judgment on this important early retirement scheme, even if you continue to pay the full
matter. amount of the original salary.
No early retirement scheme • Check with your pension provider whether there is a fiscal
In four cases a banned early retirement scheme will not be pension gap that can be used to improve the employee’s
recognized. You will not be liable for the 52% punitive levy, if: retirement pension. The early retirement scheme penalty levy
is never applicable to such pension improvements - even where
1. the employee continues to work at least 50% part-time (older this forms part of a redundancy scheme.
employees scheme);
Payroll tax in 2018 and 2019 8
• Determine whether the position can be taken that the main All salary income in the year of departure - including holiday
reason for dismissal is dysfunctional performance or pay, company car, bonuses or benefits from share schemes or
incompatibility of characters. It is recommended that you certain share option schemes - are notionally deemed to be part
make a case file which shows that the employee was given of a severance package.
the opportunity to remedy their dysfunctional performance
or that certain people can no longer work together. Change from 1 January 2018
Up until the end of 2017 all benefits from share option schemes
• In
the event of collective redundancy make sure that the were excluded from the 75% tax base if the options were awarded
proportionality principle has been correctly applied. before the year prior to the severance year. This applied to both
In the age range of 55 years and older 10% more employees conditional and unconditional options. From 2018 only options
may be made redundant compared to the number calculated awarded unconditionally or which became unconditional before
by applying the proportionality principle. 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
• If
the redundancy scheme includes voluntary departure make become unconditional after year t-2 will be deemed to be part of
it open to all employees. If it is limited to a particular group of the severance package.
older employees it will easily be seen as an early retirement
scheme. If possible, wait for the decision of the Supreme Court In all cases, the benefit of share schemes which are not option
on the early retirement scheme punitive levy in the case of an schemes will form part of the tax base on which the punitive
age-independent voluntary redundancy scheme. levy on excessive severance becomes liable.
• Check what income the employee can finance with the Influence of the work-related costs scheme (WKR)
redundancy payment in the period from the date of Case law confirms the position of the tax authorities that when
redundancy up until two years prior to reaching the age calculating excessive severance packages all allowances and
at which they are entitled to claim a State old-age pension employment benefits designated as work-related costs also
(AOW) or an earlier pension date (the 70% test). 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
• If in doubt: ask the Tax and Customs Administration in good departure year t. In the reverse situation, it will be a drawback
time for a decision that your redundancy scheme is not and of course. Allowances and employment benefits which mainly
early retirement scheme. You need to do that before you affect the amount of severance packages include the 30% facility
introduce the redundancy scheme. for extra-territorial costs and the tax-free allowance to cover the
school fees of an international school.
3.2 | The 75% punitive levy on excessive
severance packages
What should you do?
In addition to the 52% punitive levy on early retirement schemes,
the law also provides for a 75% punitive levy on excessive severance If it is intended to terminate the employment
packages. To summarise, this punitive levy becomes liable if an contract of a highly paid executive, check at the
employee with an annual salary of more than €540,000 (the earliest possible stage how much your liability
indicative salary in year t-2) has an income from salary in the for the 75% punitive levy on excessive severance
departure year (year t) of more than €1,080,000. The amount packages could amount to. There are avenues by
of the taxable salary in the intervening year t-1 is also relevant. which it is possible to avoid or reduce this punitive
If the salary includes a severance payment which also qualifies levy. Pay particular attention to the benefits
as an early retirement scheme - which is possible - then the accruing from share and option schemes.
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.
9 Payroll tax in 2018 and 20194. International payroll tax
4.1 | The new social security treaty with China a period of 5 years (60 months) are seen as a single period of
secondment unless these two periods are interrupted by a period
The social security treaty between the Netherlands and China of 12 months or more.
was signed on 12 September 2016. This treaty entered into
force almost a year later on 1 September 2017. Application procedure
The employer should submit an application for a secondment
Scope of the treaty certificate to the Social Security Insurance Bank (SVB). When this
Under the new social security treaty Dutch personnel seconded to certificate is issued, the Chinese company must submit this
China can maintain their social security cover in the Netherlands. document to the competent social security authorities in China.
The interesting aspect of this treaty is that for the Netherlands
it is limited to the State old-age pension (AOW), surviving This process must be completed within six months of the start
dependants benefit (ANW) and unemployment benefit (WW). of the secondment. No retroactive effect will be possible if the
This means that - depending on where your employee is working six month period has expired. Non-working family members
in China - regional contributions will still be liable there, for accompanying the employee may also be insured under the
example, to cover medical expenses and occupational accidents. same secondment certificate.
The Dutch income-related health insurance contribution will
then not be payable. An international medical insurance policy Existing secondments
is recommended. For staff who have already been seconded to China, the five year
period began on 1 September 2017. If the employee wishes to
Conversely, Chinese companies in the Netherlands no longer continue their Dutch AOW, ANW and WW, it is recommended that
have to pay double contributions for their staff seconded to the you make sure that a secondment certificate is issued within six
Netherlands. These people can continue to have social security months.
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 What should you do?
insurances (other than the Dutch AOW, ANW and WW) for which
contributions are payable either in the Netherlands or in China. Do you do business with China? Check in good
time what the social security consequences
Secondment provision will be for your seconded staff and any family
On request the insurance requirement during secondment remains members accompanying them. Apply for a
in the original work country, in principle, for a maximum period secondment certificate in time from the SVB
of 5 years. By exception a longer period can be agreed but this and arrange suitable medical insurance.
does need the approval of both social security authorities.
Successive periods of secondment of the same employee within
Payroll tax in 2018 and 2019 104.2 | Social security in the EU/EEA important to you if the foreign employees concerned work under
your management or supervision, or where contracting is involved.
People who regularly work in two or more EU Member In these two situations you can be held liable for all payroll taxes
States that the employer based abroad failed to pay in the Netherlands.
Within the European Union and the European Economic Area Not being accountable for unpaid Dutch contributions considerably
(EEA) there are mandatory regulations which determine in reduces your liability.
which country a cross-border employee is insured for social
security purposes. The employer is typically required to register At the moment A1 statements provide indemnification. As long
for the remittance of contributions in that country. Particularly as an A1 statement has not been withdrawn or declared invalid
in situations where an employee is usually working in two or by the issuing EU/EEA Member State, the recipient EU Member
more EU Member States - for example, an employee who lives State remains bound by it and is not permitted to levy contributions.
abroad works not only in the Netherlands but also at home - a The Advocate-General has recommended to the ECJ to rule
correct and timely assessment of their insurance requirements otherwise in cases where A1 statements have been fraudulently
in advance can avoid a great deal of ‘repair work’ later on. obtained. He concluded that in cases of fraud the country of
The European Court of Justice ruled in 2017 on when someone employment is not bound by A1 statements issued by the other
is ‘in the habit’ of working in two or more EU Member States. EU Member State. The country of employment may then levy
social security contributions. This will affect your liability.
What should you do?
Do you have personnel working ‘across the border’ What should you do?
or employees living abroad who work for you in Do you hire staff from employers based in another
the Netherlands? Check in advance not only in EU/EEA Member State or contract work out in the
which country your employee’s salary is taxable Netherlands to foreign contractors? Always ask for
but also where his or her social security cover is original A1 statements to be provided to show that
and where you are required to remit social security the employees concerned do not have social
contributions. 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
Secondment statements (A1s)
acted fraudulently. In order to do this investigate
The Advocate-General to the European Court of Justice (hereafter
their background, history and activities in the
ECJ) made an important recommendation in November 2017
about the application of A1 statements. The ECJ itself still has to
country in which they are based.
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 In addition, there is a proposal pending in the EU to change
work in the Netherlands, in principle, Dutch social security the current EU regulation on social security, also to improve
contributions are payable. This is known as the country of the application of A1 secondment statements.
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 4.3 | T
he future of the 30% facility
employee then remains covered for social security purposes in
their original country of employment. The social security body The 30% facility provides in a tax-free allowance to cover the
in the posting country can confirm that the secondment extra-territorial costs incurred by staff if they are seconded to
arrangement applies by issuing an A1 certificate (previously the Netherlands or have been recruited from abroad. Under
known as an E101 statement). This certificate essentially provides certain conditions, 30% of the salary from current employment
confirmation that Dutch social security contributions are not is tax exempt. The maximum period in which the 30% facility
payable on the salary earned in the Netherlands. This will be may be applied is currently eight years.
11 Payroll tax in 2018 and 2019The Rutte III Coalition Agreement 4.4 | Cross-border employee tax credits in 2019
The new Cabinet intends to reduce the duration of the 30%
facility by three years, to five years, from 1 January 2019. The Miscellaneous Tax Measures Bill 2018 which limits the tax
This tax facility will therefore be considerably reduced for staff credits for non-resident taxpayers from 1 January 2019, was
asked to work in the Netherlands after 31 December 2018. presented on Budget Day 2017. These employees will then no
longer receive some of the tax credits paid through their payslip
Consequences for employers but will have to submit an income tax return to claim them.
In international situations employers are more often making The reason for this change is that at the moment applying the
net salary agreements with personnel working abroad. full tax credits in the payroll for this group can result in an amount
They then pay the tax liable on the net salary themselves (‘tax payable via an income tax assessment.
equalisation’). Reducing the duration of the 30% facility to a
maximum of five years means that the employer’s burden will What this means
greatly increase from the sixth year. Based on the bill from 2019 only the tax component of the
employed person’s tax credit will be applied in the payroll for
Transition arrangements? non-resident taxpayers from the EU, EEA, Switzerland or the
It is not yet clear how the 30% facility arrangements still current Dutch Caribbean. Under certain conditions they are also entitled
before 1 January 2019 will be affected by the reduction in the to the tax component of the general tax credit, the young disabled
application period. Will these people be able to complete the period person’s tax credit, the elderly person’s tax credit and the single
of eight years that was granted, or will they too be faced with a elderly person’s tax credit, but they will have to claim these tax
reduction? This will only become clear when the new government credits through an income tax return. The tax component of all
submits its proposed legislation to amend the 30% facility to tax credits will lapse for all other foreign taxpayers. They will
parliament in 2018. have to claim the tax components of all tax credits through an
income tax return.
Consequences for cross-border employees
Cross-border employees who are tax liable in the Netherlands
What should you do?
will be most affected by the decision to scrap the general tax
Do you employ staff who make use of the 30% credits in wage tax. These tax credits amount to around €550 at
facility or are you intending to employ such the moment and will result in a cut to the monthly net salary of
personnel? Then take into account the around €46. Because these general tax credits are income-
consequences of the announced reduction in the dependent and gradually diminish as the salary increases, the
duration of the 30% facility from eight to five years net effect will be less or even zero for those on higher salaries.
from 1 January 2019, particularly if you have These cross-border employees will also have to submit a Dutch
made or intend to make net salary agreements. income tax return to be able to claim the tax component of all
other tax credits apart from the employed person’s tax credit.
Constant consideration What should you do?
For employees who apply the 30% facility you constantly need
Inform your cross-border staff in time in 2018
to check the salary threshold. Employees receiving the 30%
about the changes from 1 January 2019 and what
facility must have earned a taxable salary of more than €37,296
(€37,000 in 2017). For young people holding a master’s degree
the net effect on their payslip will be.
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.
Payroll tax in 2018 and 2019 124.5 | Staff recruited abroad Foreign pension schemes
If an employee from a foreign group company is seconded to
If your organisation employs staff recruited from abroad or if you, it may be possible for the employee to continue to take
employees from a foreign group company are seconded to you, part in the foreign pension scheme during the period of the
then we recommend that you check a number of things. 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.
The 30% facility This can be avoided by having the foreign pension scheme
If these staff make use of the 30% facility check that your designated by the tax authorities as a qualifying pension
organisation has procedures in place: i) to check in time that scheme in the Netherlands. The Netherlands then treats the
every employee making use of the 30% facility has earned foreign pension scheme in the same way as it would be done
sufficient taxable salary, i.e. a salary which is at least equal abroad from the tax perspective. The employer’s share may
to the applicable standard, and ii) to notify you in time that then not be taxed and the employee’s share tax deductible.
the duration of the 30% facility has not expired. This is set
out below. Designation as a qualifying pension scheme by Dutch standards
applies in principle for a maximum period of FIVE years.
i) The salary thresholds which applied in 2017 were at least Check that this period has not expired. If the employee continues
€37,001 (general) or €28,126 for graduates under the age of to work in the Netherlands after five years with continued
30 holding a master’s degree. No salary standards apply for participation in the foreign pension scheme, then the employer’s
certain groups of employees, such as academic researchers share towards the pension contributions will almost always be
and doctors training to become medical specialists. The salary taxable salary and the employee’s contributions will no longer
standards for 2018 are a taxable salary of at least €37,297 or be tax deductible.
€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.
13 Payroll tax in 2018 and 20195. Payroll tax for directors and supervisory directors
5.1 | Company directors 5.2 | S
upervisory directors and other supervisory
officers
Since 1 January 2013 companies could adopt a management
model with just one board. This single tier model is generally Supervisory directors working for companies with a two-tier board,
referred to as a ‘one-tier board’. The board of the company will supervisory officers of associations, societies and foundations
have on it both executive and non-executive directors (supervisory and non-executive directors on a one-tier board, therefore, will
directors). Under the two-tier model the board of supervisory no longer be deemed to be notionally employed. Under certain
directors is separate. Also per 1 January 2013 it was decided conditions they may voluntarily choose to be included in the
that new and existing directors of listed companies were not payroll tax regime (‘opt in’). Both the individual concerned and
employed by ‘their’ company. the company, association, society or foundation need to report
this to the Tax and Customs Administration. The condition which
Change from 1 January 2018 applies is that the income earned as a supervisory director/
It was not always clear how these corporate law structures officer may not constitute profit from business activities for tax
affected payroll tax, e.g. is there (deemed or notional) employment purposes, but must be result from other activities.
involved which requires the withholding and remittance of
payroll tax? An amendment to the legislation that enters into Voluntarily becoming subject to the payroll tax regime (opting-in)
force from 1 January 2018 has now made this clear. does not create a liability to employee insurances. The supervisory
director/officer continues to be excluded. There are two more
Listed companies consequences:
Until 2017 all directors of such companies with a one-tier board
were deemed to be notional employees, even the non-executive • the company is required to withhold and remit the (lower)
directors, who were actually supervisory directors. This was income-related health insurance contribution.
contrary to the notional employment of supervisory directors • the supervisory director/officer will no longer be able to
which had already been abolished from 1 January 2017. deduct the actual amount of any business expenses incurred.
This omission has been repaired from 1 January 2018: only The payroll tax regime has no provision for deductible costs.
executive directors are deemed to be notionally employed and He or she can claim tax-free allowances and employment
non-executive directors (supervisory directors) no longer so. benefits from the company, association, society or foundation.
The company has wage tax obligations only with respect to its
executive directors.
Unlisted companies What should you do?
Executive directors are actually employed by the company Together with your supervisory director or officer
and non-executive directors (supervisory directors) are not.
look at whether or not it would be desirable or even
The company has no payroll tax withholding and remittance
possible voluntarily to become subject to the payroll
requirement with respect to the latter.
tax regime (i.e. opt in).
Payroll tax in 2018 and 2019 145.3 | 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.
15 Payroll tax in 2018 and 20196. The company car from 2017
6.1 | The company car or van bought later 6.2 | T
he company car or van bought before 2017
than 2017
Although it has been made much simpler for vehicles bought after
Up until 2016 there was a whole range of nominal addition 2017, for vehicles purchased before that date it is as complicated
percentages for the assumed private use of a company car or as ever. The reason for this is that transition arrangements
van. This was due to an equal number of environmental had to be put in place for all ‘existing’ vehicles with different
discounts on the general nominal addition percentage of 25%, environmental discounts and nominal addition percentages.
which depended on the CO2 emissions and purchase date. In essence, the transition arrangements are that every car retains
From 2017 this will be slightly simpler as there will be only its original nominal addition percentage (less the applicable
two percentages: environmental discount) for a period of five years (60 months).
When this period expires the set nominal addition percentage
• at least 22%* of the list price of the company car or van, applies from the first day of the sixth year. However, if this date is
including Motor Vehicle Purchase Tax (BPM) and VAT as the after 1 January 2017 then the transition arrangements state that
general nominal addition percentage; the general nominal addition percentage is 25% (and not 22%).
• at least 4%* for zero emission vehicles (electric or hydrogen The consequences of this are odd. To take an example, from the
powered), which is the general nominal addition percentage of first day of the sixth year an ‘old’ electric vehicle with an original
22% less an environmental discount of 18%. nominal addition of 0% or 4% becomes 7% of the list price, i.e.
nominal addition under the transition arrangements of 25% less
There is also a third percentage - at least 35% of the commercial the new environmental discount of 18%.
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 What should you do?
set higher based on the amount (i.e. monetary value) of the
actual private use. The burden of proof in this situation rests Have your payroll administrator check the
with the tax authorities. 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.
Payroll tax in 2018 and 2019 166.3 | Changing company cars be added to taxable salary for this car. The threshold of 500
kilometres driven for private purposes on a calendar year basis
You get a new company car in any given year: always nice and an however was exceeded with car number 2 which leads to a
exciting moment. From the tax point of view too it can be exciting nominal addition of 4%.
- 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 However, because more than 500 kilometres were driven for
way around. You had private use in the first instance, but because private purposes with both cars, a nominal addition should be
of the high nominal addition decided not to do that anymore and made for both vehicles, as follows:
applied for a ‘Statement of no private use’.
• car 1: 22% van €35,000 x 10/12 = €6,417
It has been repeatedly ruled in the case law that if you have used • car 1: 4% van €60,000 x 2/12 = € 400
a company car to drive more than 500 km for private purposes Total €6,817
in a calendar year you are required to add the wage benefit for Wage tax, say 52% €3,545
all the company cars (or vans) provided to you in that year.
In this situation therefore €3,545 in wage tax has to be paid
Less than 500 km was driven with car number 1 (even on a for 600 km driven for private purposes, making it an expensive
calendar year basis) and you would expect that nothing should €5.91 per kilometre.
Example 2017 Nominal addition Provided in the period No. of private kms driven
Car 1 22% 01/01 until 01/11 400 km
List price €35,000
Car 2, electric 4% 01/11 until 31/12 200 km
List price €60,000
Total 600 km
17 Payroll tax in 2018 and 20196.4 | The Tesla tax Counter evidence
The employee has to be able to demonstrate that no more than
From 1 January 2019 the low nominal addition of at least 4% 500 kilometres have been driven on a calendar year basis for
for zero-emission electric cars will apply only up to a list price of private purposes. This can be done by maintaining an accurate
€50,000. Above that the general nominal addition percentage and verifiable trip log. It is then up to the tax inspector to prove
of at least 22% will apply. This ‘Tesla tax’, as it is known, will not that a trip log does not provide the evidence required, for example,
apply to hydrogen powered vehicles. 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
6.5 | Making a company car available and providing ruled that these ANPR images could not be used as counter
counter evidence evidence because there is no legal basis for the use of ANPR
images. Therefore their use constitutes an impermissible breach
A nominal addition to salary for tax purposes applies only where of privacy.
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 What should you do?
500 kilometres for private purposes. The burden of counter
evidence (which is much more difficult to meet) then rests on the Before applying a nominal addition to income for the
employee to demonstrate that this is not so. private use of a company car, first check whether an
employee has actually been provided with a company
Providing a company car car in the tax sense. Have you had discussions with
It is not immediately such that a company car has been provided the tax authorities about the acceptability of the trip
when an employee takes the wheel. The requirement is that the logs provided? Rest assured that no ANPR material
employee actually takes possession of the vehicle. The Supreme may be used against you.
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).
Payroll tax in 2018 and 2019 187. Subsidies for employers and tax facility for
employees of start-ups
7.1 | The Salary Costs (Incentive Allowances) Act • wage
cost benefits (LKVs) for certain target groups of
employees; provided you hold a ‘target group statement’:
This legislation provides for a number of low income and wage - LKV for older employees entitled to claim unemployment
cost benefits for employers: benefit (aged 56 and over);
• the low income benefit (LIV) from 1 January 2017, when you - LKV for disabled employees;
employee people on a salary of up to 125% of the statutory - LVK for the target group covered by the employment targets
minimum wage. The employee should not have reached the and quotas agreement and those under the age of 18 who
age at which they are entitled to claim a State old-age pension are unable to follow or complete their education due to illness
(AOW) and must work at least 1248 paid hours in the calendar or disability;
year (see below). - LKV for the re-deployment of people with an occupational
• the youth LIV, provided to compensate for the increase in the disability.
statutory minimum wage from 1 July 2017
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 Maximum youth LIV in 2018 per
Youth LIV per employee per paid hour
on 31 December 2017 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
Duration of Amount of LKV per Maximum amount per
LKV
LKV paid hour 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
19 Payroll tax in 2018 and 2019How do you claim these low income and wage cost The Tax and Customs Administration, the Employee Insurance
benefits? Administration Agency (UWV) and Statistics Netherlands (CBS)
The Employee Insurance Administration Agency (UWV) pays have drawn up a handy memo on how the number of paid hours
these subsidies ‘automatically’ after the end of the calendar should be calculated. You can download this document here.
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. What should you do?
Check whether you would be eligible for one or
How do you obtain an LKV target group statement?
more wage cost benefits. Arrange for target group
Your older employee entitled to claim unemployment benefit can
request a copy of this statement from the Employee Insurance
statements and instruct your payroll administrator
Administration Agency (UWV) or the municipality. All other target on entering the correct information in the payroll
group statements are issued by the UWV. Your employee can accounting, including the correct number of paid
authorise you as the employer to apply for the statements on hours.
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).
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
Payroll tax in 2018 and 2019 207.2 | The Promotion of Research and Changes in reporting on the implementation of the
Development Act (WBSO) WBSO scheme
A mandatory part of the WBSO scheme is reporting the number of
The Promotion of Research and Development Act (WBSO) - which hours actually spent on R&D and the costs and expenses incurred.
provides for a remittance reduction for R&D - has existed in its The report must be submitted to the RVO (Netherlands Enterprise
present form since 2016. It is a key incentive instrument intended Agency) within three months of the end of the calendar year.
to promote investment in R&D. Having a stable investment climate Since 2016 it has been possible to report the hours spent and
is very important to the Netherlands. The scheme will not change the costs and expenses incurred later in the calendar year in an
much in 2018. 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
Reduction in WBSO parameters in a calendar year it becomes more complicated to use an R&D
Further to exceeding the WBSO budget in 2016, the available statement for reporting. The administrative burden will now be
budget for this scheme in 2018 has been cut. The budget in reduced by making it possible to submit a combined report for
2018 will be €1,163 million. The percentage in the second band all R&D statements issued in a given calendar year. This reduction
in 2018 has been lowered as a result from 16% to 14%. in the administrative burden will take effect for the R&D statements
The percentage in the first band (32%) and the starters’ rate (40%) issued for 2018 and therefore will apply only when reporting
remains unchanged. 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%
21 Payroll tax in 2018 and 2019You can also read
