These are difficult economic times. After the corona crisis, raw materials for all kinds of products are scarce, the war in Ukraine has sent energy and food prices soaring. We all notice it as the cost of living has increased tremendously. The Dutch government has taken a number of measures in the Tax Plan 2023 to make things look a bit more bearable for most of us in 2023. AAme Salary Advisers has listed the most important changes in payroll for you.
Increase in minimum wage
Due to the enormously high inflation and severely decreasing purchasing power of lower- and middle-income Dutch people, the cabinet has decided in the 2023 tax plan that minimum wages, and all benefits linked to the minimum wage, will be increased in one go from 1 January 2023. The statutory minimum wage will be increased by 8.05% plus six-monthly indexation based on contract wage increases of 2.10%, a total increase of 10.15%.
Another major change within this framework is the adjustment to the calculation of the minimum wage. Until this year, the minimum wage is determined on a monthly basis, which ensures that an employee working 40 hours a week has a lower minimum wage than an employee working 36 hours. From 1 January 2024, this will be changed to an hourly minimum wage, regardless of the length of the working week.
Less payroll taxes and more employment tax credits
Payroll taxes are reset every year. In 2023, the first tax bracket will drop by 0.14% and the labour discount will go up. On balance, employees will have more of something left at the bottom of their paychecks.
Retirement age slightly higher
From 1 January 2023, the retirement age will move up to 66 years and 10 months. This means that everyone born after 31 May 1956 and before 1 March 1957 will reach retirement age in 2023.
Widening free space Working Costs Scheme (WKR)
The 2023 tax plan also includes a temporary 3% increase in the first bracket (up to €400,000 of the total fiscal wage bill) as of 1 January 2023. This increase will lapse from 2024 and give way to the structural increase in the first bracket of 0.22%-point. This will bring the rate of the first bracket to 1.92%.
The effect of the temporary widening of the Working Costs Scheme (in Dutch: Werkkostenregeling (WKR)) can ensure that employers who usually exceed the free allowance, and are therefore obliged to pay final tax on the excess, will now stay within the free allowance and thus be more advantageous.
The effect of this structural increase is a widening of the free allowance of €880, based on a total taxable wage bill of €400,000. This can therefore provide a tax advantage for employees where this extra space is used.
Read all about the Tax Plan 2023
On Budget Day, the government announced its intentions for the year 2023. This includes the Tax Plan 2023.
Travel allowance; from € 0.19 to € 0.21
For the first time since 2006, the kilometre allowance for travel expenses will rise from €0.19 to €0.21, and by 2024 to the €0.22 mark. This is all due to rising prices for travel by car and travel by public transport. The above amounts refer to commuting for salaried employees and for entrepreneurs for income tax purposes. An employer is of course free to reimburse more than the statutory travel allowance, however, anything above this amount is considered wages.
Targeted home office allowance
In 2022, the targeted exempt homework allowance of €2 per day was introduced, this amount can be reimbursed untaxed. In 2023, the exempted homework allowance will increase to €2.13 per day.
Incidentally, the Nibud calculated in March 2022 that the cost of working from home for employee averages €3.05 per day, compared to the calculated €2 per day in 2021.
Tracking CO2 emissions for large employers
As part of the Climate Agreement, there is to be a CO2-reduction on work-related passenger mobility. The government has therefore announced that employers of 100 or more employees will have to provide data on their employees’ commuting and business travel from 1 January 2023.
Little is yet known about how exactly this registration will take shape. Initially, it will involve totals for the entire organisation, while respecting the privacy of employees. Think of the total number of traveller kilometres (commuting & business), the means of transport used and the type of fuel for moped, scooter or motor vehicle. Employers can submit this data to the RVO (Rijksdienst voor Ondernemend Nederland) via a digital platform. In 2023, employers can submit this on a voluntary basis for 2022.
More than 100 year-end tax tips
With the year-end of 2022 approaching, now is a good time to check whether you still need to take action on tax matters. Some things cannot wait until 2023, while others call for postponement into the new year.
A lower first income tax bracket
As a component of making work more attractive, the first income tax bracket will also be reduced to 36.93%. Because working people with an income up to €73,071 will pay less tax, they will keep a maximum of €102 net in this per year.
The employer’s ZVW levy payable by employers on employees’ wages will fall to a rate of 6.68% by 2023. In 2022, it was a rate of 6.75%. Incidentally, the maximum contribution wage will be increased from €59,706 in 2022 to €66,952 in 2023.
The employee ZVW contribution will also fall by 0.07% in 2023. Thus, this was 5.50% in 2022 and falls to 5.43% in 2023. The same maximum contribution rate applies to the employee ZVW contribution as to the employer’s contribution.
Abolition of efficiency margin for customary pay
Until 2022, the efficiency margin, which is used to determine the salary of a director and major shareholder (DGA), stated that the salary of a DGA could be set 25% lower than the salary from the most comparable employment. This was due to difficulty in determining wages based on comparable employment. The 2023 tax plan initially included that this efficiency margin would be reduced to 15%. Yet the offer letter to the tax plan mentioned that the efficiency margin will disappear completely.
That is not the only thing that will change for DGAs in 2023. DGAs of so-called innovative startups will no longer be able to use the customary wage scheme from 2023. This is because an evaluation of this scheme has shown that it is underused. For this reason, the scheme will be abolished in 2023. For DMSs already using this scheme in 2022, the scheme can still be applied in 2023 and 2024. In which year the scheme will expire depends on in which year the scheme was first applied by the DGA.
30% rule and the option scheme
From 1 January 2023, the employee to whom the 30% rule is granted will be given the choice to apply the actual costs incurred or the 30% rule. This choice will be fixed at the beginning of the year and cannot be changed thereafter for the relevant year.
From 1 January 2024, the application of the 30% rule will then be limited to the WNT norm (Wet Normering Topinkomens), which is set at €216,000 for 2022. From 2024 onwards, this would mean that the 30% rule may be calculated on a maximum annual income of €151,200 (based on the current WNT norm, which is reset every year). If this amount is not enough to cover the extraterritorial costs, the actual costs can always be chosen.
From 2024, the 30% rule also has a transitional arrangement for employees for whom the rule was applied in the last period of 2022. These employees will keep the current conditions until 1 January 2026. For employees who use the scheme from 2023 onwards, the transitional arrangement does not apply.
Almost all social premiums will remain the same or decrease slightly in 2023, except for the Aof premium (in Dutch: premie arbeidsongeschiktheidsfonds – disability fund premium) for large employers. This will rise slightly from a rate of 7.05% in 2022 to a rate of 7.15% in 2023.
Questions or more information about your payroll?
Following the above, do you have any questions or would you like more information? Do not hesitate and contact us.
M. (Manal) Boulakhrif
Junior Tax Consultant
+31(0)15 203 00 88