Well begun is half done Laws and regulations
23 dec, 2016
With the new year around the corner, we would like to inform you of the information we need from you to perform the salary administration completely and in accordance with the regulations. We have put these for you in a single overview, so that you will have a good idea of the information you will need to provide. In this newsletter, you will also find an overview of the most important legislative changes for 2017.
Checklist January 2017
- Werkkostenregeling (Work-related costs scheme): have you not yet declared the reimbursed expenses that fall under the tax free margin within the work related costs scheme? Until the end of January there is the possibility to correct this in the wage tax return.
Where applicable, we would also like to receive any changes regarding net cost reimbursement which fall under tax free margin. This also applies to changes in your general ledger scheme.
- Werkhervattingskas (Work resumption budget): with the changes of January we would like to receive a copy of the Werkhervattingskas, which you should have already received from the Dutch Tax Authority.
- Pension contributions: we would like to receive the new pension premiums, percentages and franchise per 2017.
- Insurances: do you have a WIA-hiaat (Law on Work and Income in Accordance with Capacity for Work gap insurance), WGA-hiaat (Resumption of Work for the Partially Disabled Persons Regulation gap insurance), ANW-verzekering (survivor’s benefit) or health insurance which will be processed in the payroll administration, then with the changes for January we would like to know the contributions and/or percentages for 2017.
Increasing Tax Rates
The rates for the income tax in tax bracket 2 and 3 both increase from 40.4% to 40.8%. This allows the extension of bracket 3 to be limited to €67,072 instead of the €67,472, which would initially have been the result of this indexation.
The arbeidskorting (wage tax exemption) will increase for nearly everyone, while the labor deduction has been decreased with 0.4% to 3.6%.
For your employees, this will mean that in the event of a consistent salary, they will pay a little less taxes, but retain the same net wage.
Minimum wage will increase
The gross amounts of the legal minimum wage and the minimum youth wage for employees of 23 years or above will on the 1st of January 2017 increase to:
|Age||Per month||Per week||Per day|
|23+||€ 1,551.60||€ 358.05||€ 71.61|
|22||€ 1,318.85||€ 304.35||€ 60.87|
|21||€ 1,124.90||€ 259.60||€ 51.92|
|20||€ 954.25||€ 220.20||€ 44.04|
|19||€ 814.60||€ 188.00||€ 37.60|
|18||€ 706.00||€ 162.90||€ 32.58|
|17||€ 612.90||€ 141.45||€ 28.29|
|16||€ 535.30||€ 123.55||€ 24.71|
|15||€ 465.50||€ 107.40||€ 21.25|
Merging WGA-vast (Benefits to permanent employees) and –flex (Benefits to temporary employees)
As of the 1st of January 2017, the WGA-vast and WGA-flex will be merged into a single differentiated WGA premium. It will no longer matter whether an employee had a temporary contract and terminated employment during sickness or if he had a contract for an indefinite period of time and then became incapacitated for work. From then on, there will only be one type of WGA enroller. Employers need to have decided before October 1st whether they wish to become or possibly stay self-insured for the WGA. They are also able to choose a public insurance with the UWV (Employment Insurance Agency).
Self-insured for the WGA and Ziektewet (Sickness Benefits Act)
Being self-insured for the WGA insurance, the employer itself is then responsible for partial or temporary total disability of your (ex-)employees (WGA-vast). During a maximum of ten years after continued wage payment the benefit obligations and re-integration costs will be paid by the employer. The government expects that many employers who are self-insured for the WGA, will also choose to be self-insured for the Sickness Benefit Act insurance (ZW-flex). Indeed, they are already familiar with health and safety obligations and wage payment continuation and the Wet Verbetering Poortwachter (Gatekeeper improvement act).
Becoming or continuing to be self-insured for the WGA
Banks and insurance agencies have announced the new premiums for self-insured employers. Between the various banks and insurance agencies there are significant differences in the premiums of 2017. This can make it profitable for an employer to find out which insurance agency is most interesting for self-insured status. Existing employers with the status ‘self-insured’ have had to fill in a guarantee declaration before October 1st 2016 stating that they wish to remain insured using the self-insured status.
If an employer wishes to become self-insured, the employer has no inlooprisico (the risk that an insurance needs to be paid for one or several employees due to a disease or illness which already existed when the insurance commenced). The UWV will then bear the costs of existing insurances. This includes employees who are ill at the moment of transfer, and who will receive welfare payments after two years. The UWV is also responsible for the re-integration.
If an employer chooses the public insurance, he will pay the set differentiated premium. This depends on the size of the company and the industry in which the employer operates. Smaller employers pay a sectoral premium for WGA-vast and WGA-flex. After the merge, they will pay a total sectoral premium. Especially for smaller employers, the public insurance may prove interesting since a WGA enroller from the company will not directly affect the premium since an industry-wide perspective is taken into regard. However, when an employer operates in an industry with poor performance, this can have effect.
If an employer belongs to the medium or large employers, the premium may change. The differentiated premium will then be based on the common WGA risk. The premium is capped at four times the average premium and has a minimum of a fourth of the average premium. Because of the merge, the premium for individual employers may turn out higher or lower. For this group of employers, it may be interesting to see whether the self-insured status is interesting.
If an employer has become self-insured on or after the 1st of July 2015, it is not possible to terminate this. An UWV insurance policy lasts for at least 3 years.
Wet aanpak schijnconstructies (legislative act for dealing with sham constructions): what WAS it again?
As of July 1st 2015 the Wet aanpak schijnconstructies (WAS) applies. The WAS has been created to stop sham constructions in which employers try to evade the regulations for minimum wage or wages provided for by collective labour agreements. For instance, this law prohibits the deduction of meals, housing or health insurance of the minimum wage.
The Wet aanpak schijnconstructies prevents unfair competition between companies which have their labour cost too low, evasion of paying social premiums by employers who pay too low wages and the displacement of Dutch employees by low-cost foreign personnel.
Consequently, the WAS aims for a better protection of employees against underpayment and untrustworthy employers from creating unfair competition.
At this moment, the following measures from the Wet aanpak schijnconstructie apply:
As of July 1st 2015:
- Chain liability for wages: employer AND client are liable
- Exchange of information about employers
- Determining identity non-EU employee
As of January 1st 2016:
- Clear payslip
- Paying minimum wage by bank transfer
- Inspection SZW (“Ministry of Social Affairs and Employment”) checks and publicises names of companies
For the 1st of January 2017 a number of changes are scheduled, namely that employers will then have to pay the full minimum wage. All constructions in which employees pay less than the minimum wage will be prohibited. Only amounts which are legally mandatory or allowed can be deducted, such as taxes and premiums. For instance, employers will only be able to settle certain costs with the employee’s salary, namely:
- Housing costs
- Costs for energy and water
- Health insurance premiums
For housing a cap of 25% of the minimum wage has been set, including the advance payment to the energy supplier. For the insurance premium, a cap of the average estimated premium of next year applies. This year that will be € 1,243, a little more than € 103 per month.
Exception for disabled employees
For the target audience of the banenafspraak (employment arrangement, part of the Participation Act of 2014) an exception applies: for these employees, employers can directly pay all housing costs and insurance premiums to the landlord, energy supplier and insurance company. That way, minister Asscher wishes to prevent that this group of employers will face problems.
Authorisation is required
In order to directly pay the rent, utilities or insurance premium of an employee, the employer will need an authorisation from the employee in question. If the employer does not have this authorisation, then it will count as underpayment. After all, the employer pays the employee less than the legal minimum wage.
Wet aanpak schijnconstructies II (legislative act for dealing with sham constructions II)
More than a year after the Wet aanpak schijnconstructies was introduced, it can be seen as a success, also according to the unions. It has become a lot easier to deal with all kinds of tricks employers used to use to underpay their employees. It is now time to focus our energy on tricks which allow overpayment, says John Kerstens, member of parliament for the PvdA (Labour Party). “Your tax money and mine must go to good healthcare, excellent education and nice living arrangements.” Kerstens hints on a ‘Wet aanpak schijnconstructies II’. This time not to deal with underpayment of people at the bottom of the labour market, but overpayment of people at the top of the labour market. After all, in the (semi-) public sector, it’s about serving instead of earning. It is time for the cabinet (the main executive body of the Dutch government) to execute above construction.
From VAR (Declaration of Independent Contractor Status) to DBA (deregulation of labour relations): in practice
Over half a year after the Wet Deregulering Beoordeling Arbeidsrelaties (DBA) has been introduced, it is becoming increasingly clear that working with model agreements has serious shortcomings. That is why State Secretary Wiebes has decided to postpone the DBA act until at least 2018.
In July it has already become clear that the new legislation caused clients to be reluctant to engage the services of self-employed people. The assessment criteria have become more strict compared to the VAR arrangement, and more self-employed are having difficulty in meeting these criteria. More companies are wondering whether a self-employed person is also officially an entrepreneur, while this used to be the responsibility of the self-employed. Nevertheless, now it’s the companies who can be fined if it turns out that a self-employed is breaking the rules.
Beginning of September it was announced that the Dutch Tax Authorities had already rejected nearly half of all processed model agreements. While the VAR was intended to determine whether companies had to deduct and wage taxes for the self-employed, the act DBA deals with the relationship between the client and the self-employed person. According to a representative of State Secretary Wiebes (of the Ministry of Finance), this is also the reason why so many requests are rejected. Thanks to the DBA act, situations are coming to light where it is unclear whether someone is working as a self-employed person or that this person is actually employed.
Introduction law postponed
The State Secretary has already decided to postpone the enforcement of the DBA act until at least January 2018. This means that until that time the Dutch Tax Authorities will not impose surcharges or fines (excepting malicious parties). Postponing the law gives the cabinet more time to solve a number of difficulties so that the law can be re-introduced in 2018.
Wet tegemoetkomingen loondomein (salary domain concession act)
Last year, during the annual budget announcement, the cabinet has introduced the Wet tegemoetkomingen loondomein (WTL) to replace the premium discounts. A few more changes have been implemented in this act. The WTL should make it more appealing to employers to employ people that have a vulnerable position on the labour market. An important change of the WTL compared to the premium discounts is that the organisations can no longer settle the discount with the due employee insurance premiums, but by the end of the calendar year the Dutch Tax Authorities will pay the concession. The WTL has two concessions for employers, being the lage-inkomensvoordeel (low-income benefit) and wage costs benefit (LKV).
Lage-inkomensvoordeel (LIV) for employers
The LIV makes it appealing to employers to employ people with low wages. The LIV is a fixed amount per employee per hour. A distinction is made between two brackets. On the one hand, there are employees who earn up to 110% of the legal minimum wage, where the benefit is € 1.01 per employee per hour with a cap of € 2,000 per employee per year. On the other hand, there are the employees who earn between 110% and 120% of the legal minimum wage, where the benefit is € 0.51 per employee per hour with a cap of € 1,000 per employee per year. A condition to apply for the low income benefit is that the employee works at least 1248 hours per year.
If the plans of the annual budget announcement make it through the Tweede Kamer (House of Representatives) and Eerste Kamer (Senate), and these will be accepted as they are, the average hourly wage will be lowered by not standardising a 38-hour but a 40-hour work week. Here too, the cap of the second bracket will be changed from 120% to 125% of the minimum wage. This is part of the annual budget plan for 2017. This change only applies if the Verzamelwet SZW 2017 is approved as currently is.
Loonkostenvoordeel (wage costs benefit) in the event of employees incapacitated for work
The LKV will be in effect as of January 1st 2018. For the LKV a fixed amount per hour also applies. The LKV benefits employers for hiring disabled employees and older beneficiaries. The compensation amounts to € 3.05 per employee per hour, with a cap of € 6,000 per employee per year, which applies for a maximum period of three years. When re-integrating a disabled employee this benefit only applies for one year.
The LKV for employees eligible for the banenafspraak (employment arrangement, part of the Participation Act of 2014) is € 1.01 per hour, with a cap of € 2,000 per year. This also applies for a maximum period of three years.
No quota disabled employees in 2017
For the time being, there will not be a quota for employers hiring employees with either a mental or physical disability. According to State Secretary Jetta Klijnsma of Sociale Zaken en Werkgelegenheid (Ministry of Social Affairs and Employment), businesses and governments have easily achieved the set target by offering people from this target group a job.
Since 2015 the participation act is in effect, which includes the Wet banenafspraak (employment arrangement, part of the Participation Act of 2014) and quotum arbeidsbeperkten (disabled employee quota). With the participation act, the cabinet wishes to engage more people with a handicap or illness. That is why employers and the cabinet have agreed in the Sociaal Akkoord (Social Agreement) of 2013 to generate more jobs for this target group.
The objective was to create 9,000 jobs of 25.5 hours a week between January 1st 2013 and the end of 2015. In 2026, 125,000 jobs will have to have been created. If a job is for less than 25.5 hours per week, the job counts in proportion. Jobs of over 25.5 hours per week count for more than one job. The 2015 target has been met easily. Therefore no quota will be set for 2017.
What stands out in the results is that the employers in the commercial sector create more than enough jobs. The government is still lagging behind somewhat: a large portion of their employees is seconded or comes from employment agencies. In the coming years, the government will have to make more efforts to create jobs, in accordance with the banenafspraak.
The objective is that more people with a disability will work for a regular employer. Jobs can be: supportive work, for instance packaging within the catering sector or offering assistance in offices.
Employers and the government need to maintain their efforts in creating jobs for disabled. If the employers achieve the agreed upon amounts of jobs every year, the banenafspraak will continue to apply, and the quota fine will not. Only if employers in either sector does not achieve the target of the banenafspraak within a year, the quota fine can be activated in the sector in question (or both sectors).
The quota fine applies to employers with 25 or more employees. The quota percentage is determined by the Ministry of Social Affairs and Employment in the year before the quota fine will start to apply, based on a formula. The percentage may differ for the public and the commercial sector. Before the quota fine will start to apply, the national government, the municipalities and the social partners will convene.
Wet werk en zekerheid (Work and Security Act), transitional allowance
During the annual budget announcement, it has been declared that there will be an allowance for employers in the event of illness and a transitional allowance needs to be paid. When a sick employee leaves the company after two years, the employer needs to pay a transitional allowance. At that moment, the employer has already paid two years of wages to the sick employee. Various employers chose an alternative, being a ‘slapend dienstverband’ (‘dormant employment’). The employment will then continue without pay. This way, they managed not having to pay the transitional allowance.
The transitional allowance
Since July 1st 2015, all employees have the right to a transitional allowance under certain conditions, due to the introduction of the Wet werk en zekerheid. The employee then needs to have been employed for at least two years and the employment needs to have been terminated at the employer’s initiative. The amount of the transitional allowance depends on the number of years of employment at the company. The transitional allowance is determined over 100% of the gross monthly wage, multiplied by variable components, while in the second year of illness an employer has to pay 70% of the gross monthly wage.
Several subdistrict court judges have approved a ‘dormant employment’. Recently, the courts of Arnhem and Leeuwarden have also ruled that a ‘dormant employment’ is not unlawful. For an employer a ‘dormant employment’ is not completely without risks. When an employee (partially) recovers, the employer is obligated to find suitable work and start paying his salary again. When the employee becomes sick for another two years, it is possible that the employer needs to pay the salary for another two years.
Legislative proposal 2017
The annual budget of 2017 states that in 2017, the cabinet will offer legislative proposals for a better arrangement. The compensation arrangement is expected to be introduced on January 1st 2018. This will retroactively be implemented as of July 1st 2015. The UWV will implement the compensation arrangement. It will directly be financed from the Algemeen Werkloosheidsfonds (AWF or General Unemployment Fund). Because of this change, the AWF premium will increase. Also, when a company is closed down because of the owner’s retirement or long-term sickness, the UWV will provide the transitional compensation to the employees from the AWF.
Aside from this legislative proposal, the cabinet is also working on a legislative proposal which causes employers to no longer having to pay a transitional compensation in the event of economical dismissal. Arrangements can then be made regarding other facilities, such as coaching from job to job or re-training.
The effective date of this legislative amendment has not yet been established. The implementation depends on approval by the Tweede Kamer or Eerste Kamer or proclamation of the Ministerial Regulations and Orders in Council and of publication in the Dutch government gazette.
Bijtelling (additional tax liability for company cars) 2017
It can’t be seen as a big surprise: the adjustment of the percentage of additional tax liability for company cars. In 2017, this ‘additional tax liability for company cars’ will again be changed. And the changes are considerable. The cabinet has set a new course within the car taxes for the following years. It needs to be efficient and green, the tax revenue needs to become stable and most of all it needs to be simpler. The costs of the Dutch policy are currently no longer in proportion to the environmental benefit. And that means – to put it simply – that in many cases the lease car driver will pay more.
Two more percentages
Aside from adjusting the aanschafbelasting personenauto’s en motorrijwielen (car purchase tax) and the motorrijtuigenbelasting (vehicle tax) the cabinet focuses on adjusting the additional tax liability for company cars for the private use of a company car. While, this is not news in itself, but this year it seems to be more drastic than in previous years. Not only the percentages are changing, but also the amount of categories is halved in 2017. As of January, only two percentages apply. For completely electrical cars (without carbon emissions) a percentage of 4% applies. For all other cars, including the plug-in hybrid models, an additional tax liability for company cars of 22% will apply.
Paying more for private use
In many cases, the lease car driver will pay more for private use. For example, the popular Peugeot 308 SW, 14% additional tax liability for company cars was paid in 2015. In 2016, this has already been raised to 21% and in 2017 this will be 22%. This means that for the same car, you will pay over € 80 extra per month. The much-discussed plug-in hybrid cars have also seen a steep increase in additional tax liability for company cars. From 7% in 2015, to 15% in 2016 to finally 22% in 2017. That means that in many cases a net amount of over €300 needs to be paid extra per month. The announced adjustment of the additional tax liability for company cars by the cabinet seems to herald the end of these cars’ popularity.
There is, however, a small ray of hope in this story, and that is the transfer arrangement. The low additional tax liability for company cars remains in force during a 60-month period from the moment that the car has first been listed in the national vehicle licence plate register. This means that if by the end of this year you purchase a new lease car, you will be able to use the low additional tax liability for company cars until 2021. Furthermore, for the plug-in hybrid cars, a 50% fee applies for motorrijtuigenbelasting (vehicle tax). This way, it needs to become more appealing to purchase a used plug-in hybrid car.
Especially for DGAs (director and majority shareholder), during the annual budget announcement a drastic change has been presented regarding retirement, which is described in the legislative proposal ‘Uitfasering pensioen in eigen beheer en overige fiscale pensioenmaatregelen’ (Phasing out self-administered pension and other fiscal pension measures).
No more self-administered pension
The legislative proposal states that as of 2017 no more self-administered pension can be formed. Up until now this had been possible, due to the fact that DGAs do not fall under the Pensioenwet (Pension Act) in contrary to other employees. DGAs who have already formed self-administered pensions can buy this out until 2019. The tax reduction applying to this buy-out will steadily decrease towards 2019 and in 2017 only amounts to 34.5%. In 2018 this will be 25% and in 2019 the tax reduction will be ‘no more than’ 19.5%.
An alternative to the self-administered pension is the oudedagsverplichting (seniority obligation). DGAs can stamp their pension entitlement until 2020 until the balance sheet value and convert it to a reservation. The amount stays within the business and the DGA will retain his claim to this amount. The amount can no longer be increased, excepting by interest, which will legally be regulated. The DGA can use the amount at any moment to purchase an annuity or have it be paid over 20 years starting from the AOW-entitled age. New pensions can be accrued with a professional provider.
If, as a result of this newsletter, you were to have any questions, or if you would like to receive more information on the services which Arvode can offer you, then please send an e-mail to email@example.com or contact your payroll specialist within Arvode by calling 030 – 694 0480.
NIEUWS 21 apr, 2017
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