The Netherlands: Tax Developments Affecting Employers and Employees
Highlight here are two recent tax developments that will impact employees and employers.
Employer’s Levy on Top Salaries
Recently, the Bill on the Implementation of Tax Measures Budget Agreement 20131 passed the Netherlands’ legislature introducing a one-off employer’s levy on top salaries.
In 2013, employers will have to pay a one-off 16-percent levy on salaries to the extent that they exceeded EUR 150,000 in 2012. The tax base also includes the salary paid to employees by a company affiliated to the withholding agent, on the condition that the salary received from the affiliated company is taxed in the Netherlands. Employees who are benefiting from the “30% ruling” receive 30 percent of their total remuneration as a tax-free allowance. This 30-percent tax-free allowance is exempt from the employer’s levy.
This employer’s levy is due with the March 2013 wages tax return, so the associated liability must be remitted by the 30 April 2013 due date of the March 2013 wages tax return. Additional rules on what constitutes salary in 2012 for the purposes of the application of the employer’s levy are expected to be issued by way of a General Administrative Order.
Hiring through Staffing Agencies and Who’s Liable for Tax
In the Netherlands, the supplier of agency staff (i.e., employment agency) is responsible for remitting payroll tax, social security contributions, and value added tax (VAT) for newly hired-in employees. However, if the supplier agency fails to make such remittances or makes insufficient remittances, the new employer is held liable for the taxes and contributions.
Pursuant to an agreement concluded between the Ministry of Finance and employers organizations, as of 1 July 2012, businesses can avoid being held liable for payroll tax, social security contributions, and value added tax (VAT) not paid by the supplier of newly hired-in staff if certain conditions are met. The new rules are referred to as “the exculpation rules on recipients’ liability.”
For a full report, see “How to Avoid Recipients’ Liability: Relaxed Conditions as of July 1, 2012” (3 July 2012), a publication of KPMG Meijburg & Co., the KPMG International member firm in the Netherlands, at: http://www.meijburg.nl/en/market/latest-news/Pages/Recipients_liability_relaxed_conditions_as_of_July_1_2012.aspx .