Payroll tax in 2021 and 2022 - Tax, social security law and employment conditions: important considerations for employers and employees in a ...
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Payroll tax in
2021 and 2022
Tax, social security law and
employment conditions:
important considerations for
employers and employees in a national
and international context
Payroll Tax in 2021 and 2022 | 1
Payroll tax in 2021
and 2022
Tax, social security law and employment conditions:
important considerations for employers and
employees in a national and international context
Although this brochure has been prepared with the greatest care it is always
possible that over the course of time certain information may no longer be current
or correct. Our LLPs therefore cannot be held liable for the consequences of any
action taken or not taken on the basis of anything in this publication.
The information in this brochure is based on the current legislation in December
2020, including the relevant bills presented to Parliament on Budget Day 2020.
The Budget Day proposals were not yet adopted by the Upper House when this
brochure was being prepared and are therefore subject to that caveat. Further
provisions could also be included in ministerial implementation rules. In addition
case law can change the interpretation of the legislation.
2 | Payroll Tax in 2021 and 2022
Introduction
This brochure provides you with an overview of the most important developments
in the field of payroll tax and employment conditions in 2021 and successive years
as far as these were known in December 2020. We have also devoted special
attention to the COVID-19 pandemic support measures and a new temporary
investment incentive - the Job-related Investment Credit (BIK) - which are
implemented through the payroll.
We have addressed various topics that you as finance director, HR director or
professional, payroll administrator or financial controller may have to deal with.
For the sake of readability, however, we have provided concise information in
this brochure. The first section provides a brief summary of the most important
changes. You can find more information about a particular topic in the relevant
section thereafter.
To conclude
Following the information provided in this brochure, we look forward to providing
our services to you again in the coming year. In 2021 the People Advisory
Services (PAS) Practice Group of EY Belastingadviseurs LLP will, as always, be
happy to support you in making choices concerning your employment conditions
policy. We can also provide guidance for implementing measures to ensure that
you remain ‘in control’ of your payroll tax situation, in the context of a Tax Control
Framework (TCF) or otherwise. Anticipating potential risks timely will help you to
avoid unpleasant financial surprises later.
Payroll Tax in 2021 and 2022 | 3
Contents 1. The main headlines by year 6 2. The work-related costs scheme (WKR) 7 2.1 Expansion in 2020 2.2 New specific exemption in 2021 and (slightly) reduced tax-free budget 2.3 Other WKR considerations 2.4 How can EY help you with your work-related costs? 3. Payroll tax measures during the pandemic 9 3.1 Fixed travel and other expense allowances 3.2 High and low unemployment insurance contributions (WW) 3.3 Impact of working from home due to the pandemic 4. Financial support measures during the pandemic 11 4.1 The NOW support measures 4.2 The temporary Job-related Investment Credit (BIK) 4.3 Final tax levy rule and the bonus for care professionals in 2020 and 2021 5. Lump Sum Payment, Early Retirement and Leave Savings Scheme Act 14 5.1 Temporary easing of penalty tax on early retirement from 2021 5.2 Expansion of the Leave Savings Scheme from 2021 5.3 Possibility of a (partial) pension lumpsum from 2022 6. International payroll tax 16 6.1 Impact of working from home in cross-border situations during the pandemic 6.2 Directors’ fees 6.3 Brexit 6.4 Foreign travel allowance rate list for public officials 6.5 The 30% facility for incoming employees 7. Hiring freelancers and the self-employed 19 7.1 Your risk 7.2 The situation in 2021 8. Company car and bicycle in 2021 21 8.1 Higher taxable percentage for electric vehicles 8.2 The company bicycle 4 | Payroll Tax in 2021 and 2022
9. Subsidies for employers and employees 22
9.1 The Salary Costs (Incentive Allowances) Act
9.2 The Research and Development Stimulation Act (WBSO)
9.3 Life-Long Learning (LLO) and the Stimulation of Position on Labour Market (STAP) budget
9.4 The Stimulation of Leaning and Development for SME’s (SLIM) scheme
9.5 Practical Training Subsidy Scheme
9.6 ‘The Netherlands learns more’ temporary subsidy scheme
10. What you need to know about work permits in 2021 27
10.1 Brexit: how will British employees and cross-border employees be affected?
10.2 Start-ups
10.3 Easing of conditions for lower salary criterion after search year for highly educated knowledge migrants
10.4 Salary standard for knowledge migrants in 2021
11. What you need to know about the changes in employment law in 2021 29
11.1 What has happened in 2020?
11.2 What can we expect in 2021?
11.3 NOW
11.4 Compensation of transition allowance for small employers
11.5 Adequate pension for payrollers
11.6 The Assessment of Employment Relationships (Deregulation) Act (DBA)
11.7 The Posted Workers in the EU Act (WagwEU)
11.8 Other changes
12. Miscellaneous items 34
12.1 Pensionable age to climb less steeply
12.2 For public and semi-public sector employers: the WNT in 2021
12.3 Contribution differentiation for Invalidity Insurance Fund (AOF) Bill
12.4 End date for life-course savings scheme brought forward
12.5 The assumed salary of a director/major shareholder (DGA)
Annexes : The figures for 2021 37
List of People Advisory Services (PAS) contact persons of Ernst & Young Belastingadviseurs LLP
Payroll Tax in 2021 and 2022 | 5
1. The main headlines by year
The following is a summary of the main news headlines in the Changes in 2021
field of payroll tax and employment conditions in 2021 and
• Changes to the work-related costs scheme
successive years. Further in this brochure you can read more
about these topics. • Temporary exemption from penalty tax on early
retirement for premature departure
Changes due to the pandemic in 2020 with • Expansion of the tax facility for saving leave
retroactive effect to 1 January 2020
• End date of the life-course savings scheme brought
• Expansion of the work-related costs scheme (WKR) forward
• Easing of the WW contribution • Taxation of electric company cars
• Extension given for fixed travel and other expense • Web module for confirmation on working relationship
allowances when hiring self-employed
• National and international impact of working from home • Change in taxation for international directors
Other financial measures further to the Changes in 2022
pandemic • Partial lumpsum payments of pension on pension start
• NOW 1.0, NOW 2.0 and NOW 3.0 subsidies date
• Bonuses for care professionals • Introduction of differentiation in WIA/WAO contributions
6 | Payroll Tax in 2021 and 2022
2. The work-related costs scheme (WKR)
2.1 | Expansion in 2020 still available.
The tax-free WKR budget in 2020 was 1.2% on the amount
2.2 | New specific exemption in 2021 and
in excess of €400,000 of the taxable wage bill and 1.7%
on the amount up to €400,000. Due to the pandemic this
slightly reduced tax-free budget
was raised to 3.0% on a one-time basis (only for 2020). In principle, customary allowances and employment benefits
The additional tax-free budget in 2020 therefore amounts can only be classified as wages for final levy - the route to
to 1.3% of up to €400,000. This represents a maximum of specific exemptions and the tax-free budget - for wages
€5,200 per year. The government’s intention with this is to from current employment. The work-related costs scheme
enable employers who want to provide their personnel ‘with can only be applied to a very limited extent to wages from
something extra’ during the pandemic, to do this ‘tax free’. past employment, e.g. for discounts on own products and
For those with a larger workforce, for example, 500 people, Christmas boxes given to former employees.
there’s not a lot that can be done with an additional budget From 2021 the options for salary from past employment
of €10.40 per employee. But if you employ ten people then have been extended with a specific exemption for
this provides for a more substantial amount of €520 per training expenses. Education and training costs may also
person, provided that there is a total wage bill of at least be reimbursed to employees who have already left the
€400,000. organisation. In this way the government wishes to provide
Perhaps you have incurred less work-related costs during the a tax facility for the training budgets (granted under a
coronavirus pandemic of 2020 than in previous years, e.g. collective labour scheme) available to employees who are
because it was necessary to postpone the annual employee made redundant.
party or other personnel-related activities. This cost saving Funding
will have increased the WKR tax-free budget. You need to With an additional specific exemption the government incurs
finalize your ‘work-related costs calculation’ for any year in costs. To finance this expenditure the tax-free budget for
March of the following year (see Tax return deadline under that part of the wage bill in excess of €400,000 has been
Section 2.3). reduced from 1.20% to 1.18%.
Group of entities
Employers in a group of entities can apply the work-related 2.3 | Other WKR considerations
costs scheme jointly. The benefit of this is that where the tax- The classification of work-related costs
free budget is exceeded by one employer this can be offset You must be able to show in your accounts which customary
against budget room that has not been used by another. The and non-specifically exempt allowances and employment
condition for this is that all the employers in the corporate benefits you have classified as final levy wages. If you fail
entity must ‘participate’. The above increases of 0.5% and to do that and have not included a taxable allowance or
1.3% apply to the group as a whole and not to each individual employment benefit on your employees’ payslips, then you
employer separately. A group of entities therefore has to risk grossed up supplementary taxes of 98% instead of a
make a calculation of which benefit is greater in 2020: the final levy tax rate of 0% (provided there is sufficient WKR
benefit of 1.8% more tax-free budget for each entity, or the budget) or a maximum of 80%. The method of classification
benefit of making optimum use of tax-free budget which is is left open.
Payroll Tax in 2021 and 2022 | 7
Tax return deadline it will calculate for you the amount of the 80% levy to be
remitted. This tool can also help you with making an initial
If the 80% final levy is payable, you must remit this together
specification of the relevant work-related costs.
with the payroll tax return for the month of February of
year t + 1 that you submit in March. Even if you have not In addition, we have the EY WKR Analyzer. This tool’s smart
exceeded the tax-free budget, make sure that you have data analysis will enable you to extract all the relevant WKR
properly itemised all the allowances and employment allowances and employment benefits from your ledger
benefits classified as final levy wages. accounts. This will provide you with insight into your work-
related costs process and possible improvements which will
The customary criterion
enable you to reduce or even avoid the 80% final levy. We
You can only classified allowances and employment benefits would be pleased to provide you with further details.
that are not specific exemptions to the tax-free work-related
costs budget if these allowances and employment benefits
are customary. Customary means that: i) the amount does
not significantly deviate from what is granted in other similar
cases (30%), and ii) that the employer will pay the payroll
tax. The employer does not have to prove that the allowance
is customary. Tax and Customs Administration has to proof
that allowances and employment benefits are not customary.
Allowances and employment benefits up to a maximum of
€2,400 per employee per year meet the customary criterion.
There is a case still pending at the Supreme Court about the
scope of the customary criterion. If you have any doubts
about whether or not the allowances and employment
benefits that you wish to charge to the work-related costs
scheme are customary, you are welcome to contact us and
we will provide you with the latest details.
2.4 | How can EY help you with your work-
related costs?
On request, we can provide you with a free WKR calculation
tool. You can use this tool to make an inventory of your
work-related costs - which is handy for the itemisation of
the final statement (see Tax return deadline above) - and
8 | Payroll Tax in 2021 and 2022
3. Payroll tax measures during the
pandemic
3.1 | Fixed travel and other expense The high contribution (5.00% more; 7.70 % in 2021) is
allowances payable for fixed term employment contracts as well as for
permanent part-time contracts for a working week of less
2020
than 35 hours, if overtime amounting to more than 30%
Employees who have (largely) worked from home because additional hours is paid on a calendar year basis.
of the pandemic, will probably have incurred less (travel)
An example
expenses than in the past. Fixes travel allowances, such as
applying the 124/218 day rule, under certain conditions A part-time employee has a contract in writing for an
could be ‘continued’ until 31 December 2020. The same indefinite period for 20 hours a week. At the end of the
applied to fixed allowances for other expenses, provided that calendar year it turns out that they have worked an average
the employee already had an unconditional entitlement to of 30 hours a week (overtime). The 10 hours extra constitute
that allowance on 12 March 2020. more than 30% of the total number of agreed hours. The
employer is then liable for the high contribution with
Exchange
retroactive effect over a period of up to 12 months.
If employees do not receive the maximum travel allowance
Pandemic measure
of €0.19 per kilometre travelled for work (including
commuting), under a cafeteria system of employment The correction of the low WW contribution to the high one
benefits, they could exchange a taxable wage element for if more than 30% of the contractually-agreed hours are
an additional amount into a tax free travel allowance. The worked in overtime will not take place in either 2020 or
tax authorities announced that this could only be done if the 2021. Therefore the low WW contribution will be payable for
employee had made this exchange decision before 13 March all part-time employees with a permanent contractin writing
2020. - even for less than 35 hours a week. Please note, however,
Year 2021 that the 30% correction requirement will apply again from
2022. Any accrued overtime and holiday hours which you
The approval to pay the fixed travel allowance (based on
will pay out in 2022 could thus affect your WW contributions
214 travel days) free of tax is extended up to an including
in 2022.
January 2021. In January 2021 it will be determined how
the new legislation will look like for the remainder of 2021. 3.3 | Impact of working from home due to the
Please consult us for the latest update.
pandemic
3.2 | High and low unemployment insurance A frequently asked question is whether a tax-free allowance
contributions (WW) is available for the additional costs which employees incur
as a result of working from home. The National Institute for
The Unemployment Insurance Act (WW) is financed through
Family Finance Information (NIBUD) has calculated that these
an equal contribution paid by all employers, the amount
costs (for light, heating, water, refreshments, depreciation
of which is determined by the nature of the employment
of office furniture) amount to an average of €43.30 per
contract. The low contribution (2.70% in 2021) is payable
month. The work-related costs scheme includes no specific
for employment contracts in writing for an indefinite period
exemption for the employer to reimburse these costs.
with fixed working hours, which is not an on-call contract.
Payroll Tax in 2021 and 2022 | 9
Only the increase in the tax-free budget in 2020 by up to only be made upon presentation of the purchase invoice. A
€5,200 - see Section 2.1 - could offer some respite to small lump sum payment is not permitted. The question arises of
numbers of employees. Other costs can be reimbursed under whether the employer may set a maximum for the amount to
certain conditions. be reimbursed? An example: the employer has a budget of
Working from home allowance for public officials €750 available for the purchase of an ergonomic desk chair
and a height-adjustable desk. The employee wants to buy
Under their collective labour agreement (CAO) these
better or more luxurious items worth €1,000. This individual
employees receive an allowance for working from home of
would then pay €250 themselves. We would be happy to
€363 on an annual basis. For the period from mid-March
explain how this works out from a tax point of view.
2020 to 31 December 2020, this provides for a nett amount
of €225. Public officials with a tele-working allowance, who Providing free face masks for use in a work context and
receive a gross amount of €81.83 per month, are not eligible paying for rapid or standard coronavirus tests are also
for the working from home allowance. covered by the health and safety exemption, in the same way
as flu shots and other vaccinations.
Tools, computers, mobile phone, internet, Wi-Fi
infrastructure Working from home in a cross-border employment
situation
The cost of these facilities may be reimbursed as a specific
exemption provided that the necessity criterion is met. We will cover theimpact of working from home in cross-
This will apply when people work from home. Granting or border situations during the pandemic in Section 6.1.
providing these facilities is also free of tax . If working from
home ceases - and therefore the need for these facilities also
ends - then the employee must return all the items or pay
their residual value to the employer. Similarly, if the need
for them ends as a result of other situations (e.g. a function
change), then you also need to take this rule into account.
Health and safety facilities
The Working Conditions Act requires that you provide an
ergonomic home office, with no own contribution payable by
the employee. You can provide these facilities, grant them
or pay a tax-free allowance to cover such cost. If the working
from home comes to an end, there is no requirement from
a tax perspective for the employee to return these items or
pay the residual value.
Reimbursement of the cost of an ergonomic home office may
10 | Payroll Tax in 2021 and 20224. Financial support measures during
the pandemic
4.1 | The NOW support measures the turnover loss. There are three NOW schemes covering
a period of subsidy from 1 March 2020 to 1 July 2021.
Under certain conditions, the Temporary Emergency
This overview provides the basic details for NOW 3.0 for the
Measure for Sustained Employment (NOW) provides
period from 1 October 2020 until 30 June 2021. Please
compensation for part of the salary costs in proportion to
take note of the deadlines and expiry dates!
NOW 3.0 NOW 3.0 NOW 3.0
3rd tranche 4th tranche 5th tranche
Subsidy period 4th quarter 2020 1st quarter 2021 2nd quarter 2021
Turnover period of three months that 1 October 2020 to 28 February 1 January 2021 to 1 April 2021 to 31
may be selected within the time period 2021(*) 31 May 2021(*) August 2021(*)
Minimum turnover loss 20% 20% 30%
Subsidy percentage 80% 80% 60%
Mark-up on employer’s contributions 40% 40% 40%
Maximum subsidy as a percentage of
112% 112% 84%
the wage bill in June 2020
Advance payment 80% 80% 80%
16 November 2020 to 13 December
15 February 2021 17 May 2021 to 13
Application for advance payment 2020 and from 15 December 2020
to 14 March 2021 June 2021
to 27 December 2020
Application for final settlement of the
Within 24 weeks (six months) of 1 September 2021(**)
subsidy
Employee Insurance Administration
Within 52 weeks (1 year) of receipt of a complete application
Agency (UWV) decision period
Reduction in subsidy if wage bill drops
10% 15% 20%
by more than
Fine for redundancies made for NONE, provided that redundancy is arranged in consultation with the UWV.
commercial reasons Without such consultation the subsidy will be cut by 5%
Maximum eligible wage per employee
€9,538 €9,718 €4,859
per month
NOW 3.0 expiry date 1 September 2023
See Section 11.3 for further information on the NOW schemes.
(*) If a NOW subsidy has been claimed in a previous tranche, the turnover period selected must be consecutive to the previous turnover period.
(**) If an audit report is required, the 24 week period is extended to 38 weeks (9 months).
Payroll Tax in 2021 and 2022 | 11Best efforts obligation - must have been taken on or after 1 October 2020. The BIK
subsidy lapses on 31 December 2022. The conditions are
Just as with NOW 2.0, employers who apply for the NOW 3.0
that the final payment took place in 2021 or 2022 and that
scheme are required to encourage their personnel to pursue
the asset must have been taken into use within six months of
training and education. The government has introduced the
the final payment.
‘NL leert door’ (The Netherlands learns more) scheme for
this. See Section 9 for details of all subsidy schemes related Ineligible assets
to employee training.
Investments in the following are not eligible for the BIK
remittance reduction:
4.2 | The temporary Job-related Investment
• Certain assets, such as residential property, land, animals,
Credit (BIK)
vessels for representation or entertainment purposes,
Who, what and how? securities, receivables, goodwill and public law licences;
Employers liable for the withholding and remittance of • Passenger vehicles which are not intended for
wage taxes can receive a subsidy of 3.9% for the purchase professional transport purposes;
of new business assets, up to an investment figure of €5
• Business assets which are intended for rental purposes;
million; the subsidy on anything in excess of that amount is
1.8%.This investment credit will not be paid out in cash but • Assets for which obligations are entered into in respect of
may be offset against the wage tax and national insurance people who are part of the same household and certain
contributions (payroll tax) that you have to remit, (i.e. the relations by bloodline or marriage;
BIK remittance reduction). The method is the same as for the
• Business assets with an investment value of less than
wage tax reduction under the WBSO scheme (for research
€1,500.
and development work). The balance of the wage tax to
be remitted and the BIK remittance reduction may not be Please note!
negative. It may not be offset against employee insurance A business asset that was purchased and fully paid for in
contributions or the employer’s healthcare contribution. 2020 will not be subsidised.
A fiscal unity can also apply for the BIK. Nevertheless, this
opportunity will be open on a later moment, due to the fact Disinvestment
that the European Commission still has to approve. After The BIK remittance reduction does not have to be repaid if
this approval, the possibilities for application for fiscal unity the new business asset is sold after it was taken into use.
will come into effect retroactively as from 1 January 2021. The situation may be different if the business asset is moved
Please note that, if this approval will not come into effect, abroad.
the percentages of the BIK will change into 5%, and 2.08%
for investments above 5 million.
What type of new business assets?
The decision to invest - to enter into a contractual obligation
12 | Payroll Tax in 2021 and 2022Application Although it is then half the amount (€500 nett).
Applications for the subsidy should be made to the Contracted care professionals (self-employed and agency
Netherlands Enterprise Agency (Rijksdienst voor personnel)
ondernemend Nederland , RVO). The application portal will
The recipient of these care professionals must remit wage
be open from 1 September 2021, or possibly sooner. No
tax using a different final levy rule. The rate is 75% and this
more than four applications per employer responsible for tax
payroll tax must be remitted for the wage period in which
withholding may be submitted per year, a maximum of one a
the €1,000 bonus is paid. The total amount of €1,750 may
quarter. The investment amount per application should be at
be claimed from the Ministry of Health, Welfare and Sport
least €20,000. (VWS).
Designated care professionals
4.3 | Final levy rule and the care professional
bonus in 2020 and 2021 Please note that all the above rules and arrangements apply
to the bonus paid to designated groups of healthcare workers
Designated care professionals - employees and non-
and professionals. If you as an organisation decide to award
employees - are eligible for a bonus for care professionals
the bonus to non-designated professionals, then you are not
in 2020 of €1,000 which is tax free to them, also in case of
entitled to the subsidy. Nor may you make use of the special
working part-time. Among the conditions attached is that
final levy facility of 75% for the self-employed.
they earn no more than twice the most common income
(€73,000). The bonus has no impact on income-related
benefits, such as housing benefit, healthcare benefit or
child care benefit. If the care professional is an employee,
his or her employer must designate the bonus for care
professionalsas a final levy element charged to the tax-free
budget of work-related costs scheme (WKR). The bonus can
be claimed from the Ministry of Health, Welfare and Sport
(VWS), along with the final levy of 80% to be paid in March
2021 (payroll tax return for February 2021) to the extent
that the tax-free WKR budget is exceeded because of the
care professional bonus.
The care professional bonus must be paid within five
months of the date of the decision by the Ministry of VWS to
reimburse its cost. So the bonus can still be paid in 2021.
Bonus for care professionals in 2021
By applying the same final levy method designated care
professionals will be eligible for a bonus also in 2021.
Payroll Tax in 2021 and 2022 | 135. Lump Sum Payment, Early Retirement
and Leave Savings Scheme Act
5.1 | Temporary relaxation of penalty tax on Transitional law 1
early retirement from 2021 If an early retirement scheme has been agreed in writing no
An exemption threshold for early retirement schemes later than 31 December 2025, payments may still be made
(RVUs) has been introduced. The exemption is temporary under this scheme in 2026, 2027 and 2028, provided that
and will lapse from 31 December 2025. The government’s the exemption threshold is observed. Upon condition that
aim with this temporary measure is to make it possible for the (former) employee reaches pensionable age for the AOW
some people, particularly those in ‘demanding occupations’, by 31 December 2028 at the latest.
to retire sooner. The maximum exempt early retirement Transitional law 2
(RVU) severance package will be linked to the amount of The intention was to introduce an exempted threshold for
the state pension (AOW) (2021: €1,847 gross per month in payments that are considered an early retirement benefit
2020) and may cover a maximum period of three years (36 (RVU) from 1 January 2021. That did not happen. It
months) which ends upon reaching pensionable age for the enters into force after the Senate has approved it, but with
AOW. Where more than this is paid for early retirement, the retroactive effect to 1 January 2021. This means that, in the
employer will be liable for the 52% penalty tax payable on the period between 1 January 2021 and the date of publication
excess. of the legislative amendment in the Bulletin of Acts and
An example Decrees 2021, the employer has to pay the tax penalty of
An employee retires three years before reaching pensionable 52% on the entire RVU benefit. Afterwards, the employer can
age for their AOW and receives a gross lump sum of €75,000 file a correction to claim a refund for the taxes paid on the
from the employer. The employee is liable for the wage tax exempted threshold.
on this. While €66,492 (36 months x €1,847) will be exempt
from the employer’s penalty tax. The employer will be liable
5.2 | Expansion of the Leave Savings Scheme
for the 52% final levy (€4,424) on the remainder (€8,508). from 2021
Should this employee take early retirement two years before The right to paid holiday leave and compensatory leave were
reaching their AOW pensionable age, the exempt amount tax-free until 2020 provided that this does not amount to
would be €44,328 (24 months x €1,847). more than the set working hours over a period of 50 weeks.
Where part-time employment continues the maximum The wages taxes become payable when this leave is taken.
monthly amount of €1,847 gross must be reduced on a pro- To provide employees with more flexibility in bridging the
rata basis. Employer and employee may make agreements working period until they reach pensionable age for their
about the amount of the early retirement payments, e.g. by state pension (AOW) - such as through part-time retirement -
deciding to apply a part-time factor if an employee also has the 50 week limit has been doubled to 100 weeks.
other employment from which they also receive a partial Please note!
early retirement payment.
Check the extent of these leave entitlements at 31 December
2020. The value of the surplus in excess of 50 weeks is
considered a taxable benefit. If this leave entitlement is
taken later the continued payment of wages is tax free.
14 | Payroll Tax in 2021 and 20225.3 | Possibility of a lumpsum pension from • Those entitled to a surviving dependent’s pension must
2022 give their consent for the lumpsum payment;
Lumpsum payments of pension rights are not allowed. • The lumpsum payment may not be made in combination
Should such lumpsum payment take place - if it is even with what is known as the ‘high and low system’. This
possible - the employee will be liable to 69.5% tax, i.e. top involves opting for variable pension payments, with larger
rate of 49.5% plus 20% revisionary interest. From 1 January payments in the early years followed by smaller payments
2022, under certain conditions, it will be possible to receive later;
a lumpsum of up to 10% of the value of (only) the retirement • After payment of the lumpsum the remaining life-long
pension, including a part-time retirement pension. It will not pension benefit may never amount to less than €503.24
be possible to receive lumpsums of other types of pensions, per year (in 2020). Under the present legislation,
such as a surviving dependent’s pension. The lump sum will lumpsum payments may take place already if the amount
be subject to wage tax but no revisionary interest is payable. falls below this figure.
The pension beneficiary may use the nett amount of the
Example for a part-time retirement pension
lump sum freely; there is no mandatory spending purpose.
The employee opts for 40% part-time retirement. In which
The conditions upon this commutation are:
event they may commute 10% of 40% of the pension capital.
• No more than 10% of the value of the retirement pension When they fully retire, the remaining 60% of the pension
may be received as a lumpsum; can then also be paid as a lumpsum until a maximum of
• Lumpsums payments may take place at two moments: 10%. With part-time retirement the 10% lumpsum payment
is spread over the different dates on which the retirement
• The date on which the pension begins; pension starts. The 10% lumpsum option will also apply to
• In the month of February after the end of the year the other form of pension provision, the nett pension savings
in which the employee reaches pensionable age for scheme in box 3.
the AOW. This prevents the retired employee from
having to pay an old-age pension (AOW) contribution
on the lump sum;
Payroll Tax in 2021 and 2022 | 156. International wage taxes
6.1 | Impact of working from home in cross- 6.2 | Directors’ fees
border situation due to the pandemic Do you live in the Netherlands and receive remuneration as a
Tax situation 2020 director of a company which is not based in the Netherlands?
Then an announced change in the Dutch tax situation
If your employee lives abroad and works (also) in the
will be important to you. The foreign director’s fee forms
Netherlands, it is necessary to determine in which country
part of your world income taxable in the Netherlands. You
they are liable to tax. The main rule in tax treaties is that
receive a deduction to prevent double taxation because the
income which is directly related to days physically worked
director’s fee will also be subject to tax in the foreign country
in the Netherlands, is taxed in the Netherlands. The income
concerned. This deduction will be calculated based on a
which is related to days worked in the home state and in
(favourable) proportionality method. This method means
any other countries is in principle taxable in the country
that, eventually, you are not liable for Dutch tax on foreign
of residence. The Netherlands has made agreements with
earnings but if there is other income on which only the
Belgium and Germany that days worked at home due to the
Netherlands may levy tax, this other income is taxed at the
coronavirus pandemic will be treated as days worked in the
rate which corresponds to the higher world income and not
original work country. The result of this agreement is that
at the lower rate which corresponds only to that other Dutch
the (wage) tax liability of the cross-border employee does
income. This is known as the progression provision.
not shift. However - if it is more advantageous for them to
do so - the employee could invoke the unchanged tax treaty Change in 2021
and take the position that they are tax liable in the country It was announced that the proportionality method will be
of residence for the income related to the days working from replaced by the so called ‘credit method’. This did not happen
home. as per the expected date of 1 January 2021. This means
Tax situation 2021 that the proportionality method still can be applied in 2021.
The proposed credit method means that the tax payable in
The above agreement with Belgium and Germany is extended
the Netherlands on your world income will be reduced by the
until 31 March 2021. Make sure you stay informed of the
amount in tax actually paid abroad on the foreign income. If
latest situation, especially if there are also other countries
the tax rate there is lower than it is in the Netherlands, then
involved.
you will have to pay extra. If the tax rate abroad is higher,
Social security law you will not receive a refund. The credit method maximum is
Working from home could also affect the social security the amount of tax that would apply under the proportionality
position of the employee concerned. The authorities have method.
also adopted the position for 2020 that working from home
due to the pandemic does not change the employee’s social 6.3 | Brexit
security position. Make sure that you stay informed of the After the United Kingdom left the European Union on 31
latest situation in 2021. January 2020, a transition period applied which ended on
For social security, the Netherlands arranged that the 31 December 2020. Nothing changed during this period.
agreements have been extended until 31 March 2021.
16 | Payroll Tax in 2021 and 2022Social security scheme in its entirety for the tax-free reimbursement of
expenses if they send employees on foreign business trips.
The Netherlands has prepared for the possibility of a ‘no-
One of the conditions is that from a cost point of view the
deal Brexit’ should the United Kingdom and the EU member
employee’s circumstances must be the same as those of a
states fail to reach agreement on an exit scenario. Based
public official on government business. You can find the list
on the withdrawal agreement, during the transition period
of rates in Annex 8 to the Central Government CAO.
(until 31 December 2020), the European Regulation relating
to social security will be applicable as if the United Kingdom These regulations provide for a fixed daily allowance for
is still a member of the European Union. These rules will lodging related expenses. A list has been drawn up for almost
also be applicable after this date for cross border workers, every country in the world with a maximum amount for tax-
who were covered by the European Regulation before this free accommodation costs, as well as a set amount for other
date, in situations continuing after this date (based on other lodging related expenses. The fixed amount for other
transitional law, under certain conditions). In new situations, subsistence expenses is broken down as follows (in percent):
it will be possible to apply for the current rules, but it will be
In percent
dependent on the final agreements with the UK.
Breakfast allowance 12%
Tax situation
Lunch allowance 20%
Brexit has little or no impact on wage tax. The existing Dinner allowance 32%
(bilateral) tax treaty between the Netherlands and the United
Allowance for minor expenses: 36%
Kingdom remains in force. However, one change is that
• 1.5% per hour × 24 hours
employees who live in the United Kingdom and who are liable
Total amount per full day 100%
for tax on their salary in the Netherlands except situations
on the transitional law, are no longer entitled to the tax part An example
of the income-related employed person’s tax credit. They
A public official and an employee - whose circumstances are
were already not entitled to the tax part of the general tax
the same from a cost point of view - go to Paris for five days
credit. Besides transitional situations, residents of the United
on business. The fixed tax-free allowance for both of them
Kingdom aren’t entitled to the rule for qualifying foreign
per full day will be no more than:
taxpayers.
• For accommodation €192
6.4 | Foreign travel allowance rates list for • For other lodging related costs €128
public officials
• Total amount per full day €320
This expense allowance scheme sets fixed amounts which
• Total for five full days €1,600
may be reimbursed tax-free to public officials travelling
abroad on government business. The scheme breaks down
expenses into the cost of lodging, breakfast, lunch and
dinner, along with other minor expenses. Under certain
conditions employers in the private sector can apply this
Payroll Tax in 2021 and 2022 | 176.5 | The 30% facility for incoming employees Additional claims
Salary standard The fixed 30% allowance covers all the extra-territorial
(ET) costs incurred by incoming employees. Any
To be eligible for the full amount of the tax-free allowance
additional reimbursement constitutes taxable salary.
of 30% of salary to cover extraterritorial costs, incoming
Check your expense claims policy to avoid double (taxable)
employees must be paid a taxable annual salary of at least
reimbursement of ET costs.
€38,961 (high salary standard) or €29,616 (low salary
standard for young graduates holding a master’s degree). Non-active status prior to the termination of an
It is important that you check this carefully. If the salary employment contract
standard is not met in any year, the 30% facility will be If you exempt an employee from performing work in such a
permanently cancelled with retroactive effect to 1 January situation but continue to pay their salary in full or in part, the
of that year. 30% facility may not be applied to this salary. The condition
Unpaid leave of current employment will then no longer be met.
If the employee receives less taxable salary as a result of
taking unpaid leave (in full or in part), this can affect the 30%
facility. Certain forms of unpaid leave, however, are left aside
when assessing the salary standard. The taxable salary that
would have been paid had that leave not been taken may be
assumed.
These types of leave are:
• Pregnancy leave;
• Parental leave;
• Adoption leave;
• Foster care leave;
• Additional post-birth leave under the Additional Birth
Leave Act (WIEG).
Partial application in other cases
If the taxable salary is less than the standard - without the
above forms of leave - the 30% facility may be partially
applied. No tax-free allowance of the maximum of 30% but
less, 20%, for example. This lower rate must be agreed with
the employee in an addendum to the employment contract.
18 | Payroll Tax in 2021 and 20227. Hiring freelancers and the self-employed
7.1 | Your risk ‘malicious intent’. We consider this stance to be too rigid in
situations where the client has a tenable standpoint.
Is the freelancer or self-employed person you have hired
really a business owner or actually an employee (notional
7.2 | The situation in 2021
or otherwise)? Every client has to ask this important
question because qualification as an ‘employee’ (notional Proposed legislation that were intended to replace the
or otherwise) has major financial consequences. You are Assessment of Employment Relationships (Deregulation)
then deemed to be the employer and required to withhold Act (DBA) have not gone beyond the elementary phase of
and remit all payroll taxes. If that has not been done, then internet consultation. These proposals had to provide those
supplementary assessments with interest, and possibly fines who are truly self-employed and their clients with certainty
too, may follow. that there is no employment situation involved (notional
or otherwise), on the one hand, and prevent bogus self-
The Assessment of Employment Relationships (Deregulation)
employment, on the other. New legislation has been left until
Act (DBA) was intended to regulate the tax and social
after the formation of the new House of Representatives
security position of the self-employed, together with the
further to the elections in March 2021.
publication of model agreements. That has not happened.
In any event the DBA legislation will not be enforced up until Web module for client statement
1 October 2021 - known as an enforcement moratorium - Further to the completion of a successful pilot - clients can
unless the client has been found to be of ‘malicious intent’. apply for a statement to confirm the working relationship
‘Malicious intent’ using a web module. This statement will provide the client
with certainty in advance to be exempt from the requirement
The risk of supplementary assessments with interest and
to pay payroll tax. This will not apply if the web module was
fines only applies in the event of ‘malicious intent’ if it is
not completed truthfully and the actual working relationship
deemed that you as the employer are actually responsible
is different (i.e. an actual employment relationship). Applying
for the tax withholding (with retroactive effect). While
for thisstatement is not mandatory. Other evidence may also
initially ‘malicious intent’ applied only in the most serious
be used to prove that there is no relationship of employment
cases of parties operating in a context of deliberate fraud or
(notional or otherwise).
deception, enforcement measures can now also be applied
in other cases of malicious intent where a situation of After answering the questions the web module will produce
evidently bogus self-employment is deliberately allowed to a result:
exist or continue to exist. The tax authorities have to proof • Issue a statement (no employment relationship);
that evidently bogus self-employment has been deliberately
allowed. • Issue an indication of employment;
Following a company visit the Tax and Customs • Issue neither a statement nor an indication of employment
Administration could take the view that a hired freelancer (no decision possible).
is an employee (notional or otherwise) and instruct you to
withhold and remit the payroll taxes due. Should you fail
to follow this instruction, then you will be deemed to be of
Payroll Tax in 2021 and 2022 | 19Indication for employment prepared in advance of the new legislation when the present
lifted enforcement ends. We would be happy to go through
If the web module produces this result it will probably
the published list of questions in the web module with you.
be necessary for the company to arrange the working
relationship in a different way. If no action is taken it may
well be deemed that they are acting in breach of the law and
during an inspection it would be judged that the relationship
is one of employment with all its consequences.
What should you do?
In view of these future developments it continues to be
important that you review your contracts with freelancers
and the self-employed - especially long-running contracts
with people working full-time, performing work which
forms an essential part of your operations. You will then be
20 | Payroll Tax in 2021 and 20228. The company car and bicycle in 2021
8.1 | Higher taxable rates for electric vehicles - remains applicable if the company car is not (or no longer)
used for business purposes in other situations (during the
The taxable percentage for private use of a new electric
pandemic). Known practical examples of this are being
company car has been further increased from 2021 to 12%
permitted to continue using a company car after the
of the list price (8% in 2020) up to €40,000 (€45,000 in
employment contract has ended or when a person is put on
2020). The standard taxable percentage of 22% applies
non-active status prior to dismissal or redundancy.
to the amount in excess of this threshold. The table below
shows what the taxable percentage will be for the coming
8.2 | The company bicycle
years:
The rules concerning a company bicycle have not changed
Nominal Nominal
relative to 2020.
addition Maximum list addition on
Year Employee buys the bicycle
price the excess (at
(at least) least) It was and is still possible as an employer to provide an
2020 8% €45,000 22% interest-free tax-free loan for a bicycle purchased and owned
2021 12% €40,000 22% by an employee. The employee can repay the loan from the
2022 16% €40,000 22% tax-free allowance of no more than €0.19 for each kilometre
cycled for work, including commuting. The employee can, of
2023 16% €40,000 22%
course, also pay off the loan from other private resources.
2024 16% €40,000 22%
Employer buys the bicycle
2025 17% €40,000 22%
2026 22% n/a n/a If the employer provides a bicycle on loan (leased or
otherwise), 7% of the recommended retail price (RRP) should
The standard taxable percentage of at least 22% above
be added to the employee’s taxable salary.
the threshold amount does not apply to electric vehicles
with integrated solar panels or vehicles that are hydrogen Nothing has to be added to the salary for company bikes
powered. that areleft at the employer’s premises at the end of the day.
If a bicycle is provided on loan a tax-free kilometre allowance
Less business use and more private use due to working
of €0.19 may be paid for business trips or commuting. This
from home during the pandemic
will be different if the employer can demonstrate that the
Does this change in usage affect the amount of the nominal company bicycle is not used for such trips. But in practice it
addition to salary? No. Only in situations of excessive private will be difficult to provide the necessary proof for this.
use can the tax authorities apply a higher salary if it can be
A company bicycle can be provided on loan together with a
demonstrated that the value of the actual private use is more
company car. Unlike company cars, the fixed taxable income
than the standard percentage . Something which is almost
for a company bicycle may be classified as final levy salary
impossible to do.
(i.e. as a work-related cost). The fixed taxable income for a
Only private use bike can therefore be included in the tax-free budget.
The standard percentage - of 22% for non-electric vehicles
Payroll Tax in 2021 and 2022 | 219. Subsidies for employers and employees
This section provides information on: lower paid workers who work at least 1,248 hours a year. In
• The Salary Costs (Incentive Allowances) Act; addition, the Youth LIV subsidy is intended for young people
of 18, 19 or 20 years of age.
• The Research and Development Stimulation Act (WBSO);
Changes to the LIV and the Youth LIV
• The Stimulation of Position on Labour Market (STAP)
budget; Both the LIV and the Youth LIV were halved on 1 January
2020. The Youth LIV will be gradually reduced over the next
• The Stimulation of Leaning and Development for SME’s
few years until it ends on 31 December 2023. The figures
(SLIM) scheme;
are as follows:
• The Practical Training Subsidy Scheme
2021 (maximum) 2020 (maximum)
• ‘The Netherlands learns more’ temporary subsidy scheme
LIV € 960 €1,000
9.1 | The Salary Costs (Incentive Allowances) Youth LIV
Act • 18 years €135.20 €135.20
The law provides for various ways to reduce the wage • 19 years €166.40 €166.40
costs of employees who have a vulnerable position on • 20 years €613.60 €613.60
the labour market. The aim of the legislature here is to The amounts for 2021 will be announced in July 2021
encourage employers to take on and retain people who have
Application
less chances at the employment market. The wage cost
benefits (LKVs) are laid down in the Salary Costs (Incentive You do not need to apply for either of these subsidies. After
Allowances) Act and apply to older employees, employees the end of the calendar year they are ‘automatically’ awarded
with an occupational disability, the special target group based on the data held in the register of the UWV which is
in the employment targets and quotas agreement (long- based on your monthly payroll tax returns. It is therefore
term unemployed and young people on low incomes) or very important that correct payroll tax returns are made
reassigned employees with a work disability. showing the correct number of paid hours.
There are conditions attached to each of the salary cost Payment
benefits, including holding a target group statement Entitlement to and the amount of the subsidies are
issued by the municipality or the Employee Insurance established in the calendar year (t+1) following the year (t)
Administration Agency (UWV). The benefit is either to which the subsidies apply. You will receive a provisional
calculated per hour worked or on the basis of a fixed annual statement showing the subsidies that you are entitled to
amount (€2,000 to €6,000 per year). The scope of this before 15 March of year t+1. If the provisional calculation
Memorandum does not cover all the conditions in detail but is not correct, you have until 1 May of year t+1 to submit
we will discuss a couple of particular points here. correction notices. The subsidy becomes final on 1 May. The
In addition to the wage cost benefits (LKVs) for certain decision then follows no later than 1 August with payment
groups of employees, there is another subsidy called the within six weeks of that date.
Low Income Benefit (LIV). This is a subsidy for retaining
22 | Payroll Tax in 2021 and 20229.2 The Research and Development How much subsidy will you get?
Stimulation Act (WBSO) The financial benefit of the WBSO comes from two tax
The Research and Development Stimulation Act (WBSO) brackets and has been increased for 2021. In the first
provides a subsidy for employers who employ people tax bracket employers and business owners can deduct
engaged in innovative work. Provided that certain conditions 40% of their R&D wage and other costs up to a maximum
are met, you are entitled to claim this remittance reduction. of €350,000 from the wage tax and national insurance
The WBSO is intended not just for big companies, it can also contributions to be remitted. An amount of 50% in the first
be very favourable for SMEs. A higher percentage applies bracket applies for start-ups. If the R&D wage and other costs
for the WBSO subsidy up to an amount of €350,000 of amount to more than €350,000 then a rate of 16% applies in
annual wage and other costs for research and development the second tax band. An overview below:
(R&D). Also the self-employed may be eligible for this subsidy Amount
R&D remittance Percentages Percentages
under certain conditions. 2020 and
reduction 2021 2021
Every employer(that is not a public knowledge institution) 2021
employing people to carry out R&D can make use of the Maximum, for all
€350,000 40% 32%
WBSO. The employees concerned should be undertaking costs
R&D work for one of the following projects: For start-ups, for all
€350,000 50% 40%
costs
• A development project: this covers the development of
On the surplus, for all
new technical physical products (or components of such), 16% 16%
costs
production processes or software;
Administrative requirements
• Technical and scientific research (TWO): this covers
explanatory research of a technical nature. You are required to maintain and keep R&D records that may
be subject to inspection. From these records it must be clear
Application how many hours your employees spent on R&D projects and
You must submit an application to the Netherlands any other costs you may have incurred in that context. The
Enterprise Agency (RVO) no later than in the month before R&D records will show per project the nature, content and
the start of the R&D activities. You may submit a maximum progress of the R&D work carried out.
of four WBSO applications per calendar year. An application
must relate to a continuous period of at least three and no
more than 12 consecutive months and this period may not
go beyond the end of the calendar year.
Profit deduction from income tax and use of the
innovation box in corporation tax
An R&D statement grants eligibility for these two tax
facilities.
Payroll Tax in 2021 and 2022 | 23Important new chapter in life may also qualify provided that it is
Due to the coronavirus pandemic the R&D hours may be less more than just recreational in nature. There will be a
than estimated in advance. If the reduction in the number of register of courses with a list of permitted courses and
R&D hours continues on a prolonged basis, you will receive training activities.
an amended decision from the RVO following your reported • Employers can provide training and education budgets for
actual hours spent. their personnel included in collective labour agreements
It remains important - even in a working-from-home situation or other agreements. There will be a rule which
- you maintain proper R&D records. allows employees to save their personal learning and
development budget into the next year and even take it
9.3 | Life-Long Learning (LLO) and the with them to another employer (portability).
Stimulation of Position on Labour Market
9.4 | The Stimulation of Leaning and
(STAP) budget
Development for SME’s (SLIM) scheme
The government has taken measures with the intention to
SLIM stands for ‘Stimulation of learning and development
encourage employees to invest in continuing education.
in SMEs’. The subsidy scheme will be run by the Ministry
These measures are expected to enter into force on 1
of Social Affairs and Employment (SZW). By introducing
January 2022. Here is an overview:
the SLIM scheme the government wants to contribute to
• For those in employment, the deduction from income
initiatives aimed at encouraging life-long learning (LLO) in
tax for training and education will be abolished from 1
the SME sector, particularly in large agricultural businesses,
January 2022. The specific exemption in payroll tax for
as well as in the hospitality and recreation sectors. The
allowances provided by employers will remain in place.
subsidy - which partially compensates the costs incurred by a
• A Stimulation of Position on Labour Market (STAP) company offering practical on-the-job training opportunities
budget to improve your position on the labour marketwill as part of the training - may be applied for by any SME
be introduced. This will be a government subsidy of up business owner, partnership or cooperative arrangement
to €1,000 a year for education and training activities between at least two SME owners.
which will be available on a first come, first served basis.
How much?
The maximum government budget for this is €200
The subsidy will be granted on the basis of co-funding. In
million which means that 200,000 people can claim
principle, a standard co-funding percentage of 60% will apply,
it. The scheme will be administered by the Employee
in which the government provides 60% and the business,
Insurance Administration Agency (UWV) who will pay the
partnership or cooperative alliance provides 40%. To make
subsidy not to the individual concerned but to the course
the scheme more attractive to small businesses, a co-funding
organiser.
percentage of 80% will apply to them. A small business is
• Training which qualifies (after 1 January 2022) will be
defined as a business employing no more than 50 people
courses and programmes not just to remain in the current
and where the annual turnover or annual balance sheet total
position but also study and training for different future
does not exceed €10 million. The maximum subsidy for an
employment. A pre-retirement course to prepare for a
individual application by an SME will be €25,000. For
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