Is there a way for employers to reduce their wage costs? Yes there is! Namely by giving employees in a vulnerable position a chance to work. Would you like to know more about how this works? Then read on!

Wage Allowance Act (Wtl)

As of 2017, the Dutch legislator has introduced the Wtl (Welfare Allowance Act). This introduces three allowances for employers to employ people with a vulnerable position on the labour market. These are the Low Income Benefit (LIV), the Contribution towards raising the minimum wage (Jeugd-LIV) and the Labour Cost Benefit (LKV). The intention is that this will encourage employers to contribute to increasing labour participation.

What does an employer have to do to receive the (Youth) LIV?

The employer does not have to apply for the LIV. It is calculated on the basis of the wage tax returns submitted. The UWV assesses which employees are entitled to the LIV on the basis of the returns. It is important that the employer also correctly fills in the number of hours worked. Because are the details in the declaration incorrect? If so, the employer may miss out on all or part of the LIV.

What must an employer do to obtain the LKV?

If an employer wants to receive the LKV, the employee must provide him with a copy of the target group statement LKV. The employee must apply to the UWV for this target group declaration LKV within three months after starting employment. There is one exception to this: if the employee is 56 years or older and receives benefits under the Participation Act (bijstand), IOAW or IOAZ, the employee must apply to the municipality for the target group statement LKV, also within 3 months.

As soon as the employer has received the target group declaration LKV from his employee, the indication ‘LKV’ in the payroll tax return must be set to ‘yes’ before 1 May 2022. This way, the employer can receive the LKV.

The target group declaration LKV must be set to “yes” in the wage tax return before 1 May 2022!

Provisional calculation

Employers who are entitled to a benefit under the Wtl will receive a letter with the specifications. This provisional calculation states for which employees and for which amounts the employer is entitled to one or more allowances. It is important to check this provisional calculation carefully! If the calculation is incorrect, employers have until 1 May 2022 to submit correction declarations.

Need help? Get in touch with us!

We hope the above points of attention have given you more clarity on how an employer can reduce his wage costs. In case you have questions or need help, do not hesitate to contact us. You can reach us at payroll@aame.nl or by phone 015 215 88 15.


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