The transition to a new calendar year is always a busy period. This year requires extra attention to various changes in labour law, payroll tax and social legislation. Below is an overview of the main developments and areas of focus for 2025:
Working expenses scheme (WKR)
The first tranche of the free WKR allowance will be 1.92% over the first âĴ400,000 of the wage bill in 2025, as in 2024. Above âĴ400,000, the current rate of 1.18% will remain in 2025 as well. Despite the percentages remaining the same, it is important to stay sharp on the WKR around the turn of the year.
Ov exemption
Since 1 January 2024, it has been possible to provide employees with an ov subscription or benefit hours card without it being considered taxed wages. To meet the conditions, although the employee must also use the ov card provided by the employer for business purposes, there is no longer a restriction on private use of the card.
Moreover, the Tax Plan 2025 proposed to no longer limit the exemption to public transport in the Netherlands from 2025 onwards.
Adjustment of premium rules for overtime in permanent contracts
The cost of overtime in the WW premium will go down for large permanent contracts from 1 January 2025. The measure contributes to the internal agility of companies and constitutes a burden reduction for them.
Due to the so-called premium differentiation in the WW, employers pay a low WW premium for permanent contracts and a high WW premium for flexible contracts. To give employers flexibility, an employee is allowed to work 30% more than the hours of the fixed contract. If more than 30% more than the fixed number of contract hours is worked on average, the high WW rate will apply for that entire year (i.e. retroactively).
Larger employment contracts, where an employee works an average of 35 hours or more per week, are exempted from this rule. This exception will now be widened to contracts averaging more than 30 hours per week. This increases the internal agility of companies, while employees retain the security of their contract.
Low-income benefit (LIV) to be abolished in 2025
The low-income benefit (LIV) is an allowance for employers who employ low-wage workers. The youth LIV had already been abolished from 1 January 2024, and from 1 January 2025 the regular LIV will also be abolished. The Tax Administration will pay out the LIV for 2024 in 2025.
Final levy for company van
For the private use of vans that an employer makes available to an employee, an additional taxable benefit must be applied to the employee in the payroll records. For delivery vans that are continuously used alternately, it is difficult to determine the private use of the van per employee. The employer may then choose to buy off this benefit via a final levy, provided the conditions are met. This final levy amounts to âĴ300 per van in 2024 (as in previous years). However, the Tax Plan 2025 proposed to increase the final levy to âĴ438 in 2025. From 2026, this amount will be indexed annually.
Additional taxable benefit for electric cars
For electric cars, a reduced addition rate applies for the list price up to âĴ30,000. In 2024, this percentage will be 16%, from 1 January 2025 a percentage of 17% will apply.
For the part of the list price above âĴ30,000, a 22% addition rate will continue to apply, as in 2024.
Adjustment 30% ruling: reduction to 27%
Last year, the 30% rule for incoming and outgoing employees was scaled down. Since 2024, the maximum tax-free allowance for the first 20 months is 30% of the salary, the next 20 months 20%, and the last 20 months 10%. Transitional law applies to existing cases.
On Budget Day, it was proposed to undo the phasing-out. Instead, from 1 January 2027, it will be at a flat rate of 27% for the entire maximum duration of 60 months. Salary standards will also be raised. There is transitional law for employees where the 30% rule was applied before 2024. At the moment, it is not yet clear whether both the Lower and Upper Houses agree to this change. But in practical terms, the maximum tax-free allowance will continue to be 30% of the taxable wage in 2025.
Note that the abolition of the partial foreign tax liability from 1 January 2025, was already approved last year. This does not affect employers, but it does affect the tax position of employees who started applying the 30% rule only after 31 December 2023.
Enforcement of DBA Act and VBAR Act for zzp’ers
The Deregulation of Assessment of Employment Relations Act (Wet DBA) was introduced several years ago to provide clarity on whether a self-employed person should be considered an employee. In recent years, a so-called enforcement moratorium applied, which meant that the law was only enforced in exceptional situations.
As of 1 January 2025, the enforcement moratorium expires. This means that from then on, the Tax Authorities will check whether a self-employed person should be considered an employee, and enforce accordingly.
At the same time, new legislation surrounding the hiring of self-employed workers is still pending. The Wet verduidelijking beoordeling arbeidsrelaties en rechtsverm presumen (VBAR) should provide the long-awaited clarity. The VBAR aims to combat false self-employment by further colouring the open norm âworking forâ based on recent court decisions. Furthermore, a so-called legal presumption will be introduced on the basis of which workers with an hourly rate lower than âĴ32.24 per hour will be deemed to perform their work on the basis of an employment contract. Three essential factors that matter in distinguishing between salaried employment and a ZZP:
- work-related management,
- organisational embedding, and
- own account and risk.
For now, therefore, parties have to make do with the DBA Act and all the uncertainty it entails.
Tax and labour law risks for self-employed persons
If the Tax Authorities rule that there is an employment contract instead of a contract for services, there is a tax risk that the Tax Authorities will demand retroactive payment of wage tax and contributions on the amounts paid to the self-employed person, plus statutory interest and penalties. This creates a significant financial risk for the client/employer. The retrospective taxation takes place with retroactive effect to 1 January 2025. In cases of obvious false self-employment, the after-tax may also take place for periods before 1 January 2025. In addition, there is also a labour law risk: the self-employed person can at some point (often in case of long-term illness or termination of the assignment by the client) claim an employment contract, including sick pay continuation, dismissal protection, pension accrual, and so on.
Map out the hiring of freelancers, make sure you recognise potential risks in time and, if necessary, take measures to mitigate them. This topic requires your attention before the end of 2024. We will be happy to help you clarify your position.
Indexation of statutory minimum wage
The statutory minimum wage is indexed every six months. As of Jan. 1, 2025, the minimum wage is âĴ14.06 per hour; an increase of 2.75%. The reference monthly wage will be âĴ2,191.80 per month as of Jan 1, 2025.
As of Jan. 1, 2025, the minimum wage increases by 2.75%. This means that the hourly wage will rise from âĴ13.68 to âĴ14.06 for employees aged 21 and over.
Below you will find an overview of the minimum wage per hour. This applies to all working weeks: whether you work 36, 38 or 40 hours per week – the hourly wage is always the same. Based on your collective labour agreement, there may be other agreements on wages.
Table of minimum hourly wages as of 1 January 2025:
| Age | Minimum hourly wage |
| 21 years and older | âĴ 14,06 |
| 20 years | âĴ 11,25 |
| 19 years | âĴ 8,44 |
| 18 years | âĴ 7,03 |
| 17 years | âĴ 5,55 |
| 16 years | âĴ 4,85 |
| 15 years | âĴ 4,22 |
Future Pensions Act – new pension scheme – transition plan
On 1 July 2023, the Future Pensions Act entered into force. This law aims to create a more personal and transparent pension system, better suited to social developments and the current labour market. The transition to this new system requires a careful transition. Temporary workers will have a new pension scheme from 1 January 2026. NBBU and ABU, together with trade unions FNV, CNV and De Unie, have determined what the new pension scheme will look like. The new scheme is in line with the Future Pensions Act and has also been greatly improved. The choices and agreements made on this have been worked out in a transition plan, as required by law.
Act revising lump sums, RVU and leave savings
Under this Act, from 1 January 2025, participants in a pension scheme will have the choice between withdrawing a lump sum (1) on the retirement date or (2) in February following the year in which the participant reached the state pension age. The lump sum will not exceed ten per cent of their pension entitlement.
Expiry of the low-income benefit (LIV) for employers
From 1 January 2025, the concession employers can receive for low-income employees will expire. The LIV was intended as an incentive for employers to hire and keep people with a vulnerable position on the labour market (more often). Research shows that this measure contributes only marginally to labour market opportunities for this group. The money released by the expiry of the LIV will be used for other allowances for employers.
Abolition of wage-cost advantage (LKV) for the elderly
The LKV for employers employing older workers will also be phased out by 1 January 2025. This gradual phasing out means that the LKV for older employees for employment relationships that started on or after 1 January 2024 will be reduced on 1 January 2025 and abolished on 1 January 2026. For employment relationships that started before 1 January 2024, the LKV will continue to apply.
Widening LKV redeployment of disabled employee
From 1 January 2025, the criteria for the LKV for the re-employment of an employee with a disability will be expanded. This widening will lead to employers being eligible for LKV in more cases when they re-employ an employee with a work-limiting disability in their own job or elsewhere within the company.
Cost of overtime in WW premium for (large) permanent contracts goes down
Employers pay a lower WW premium for permanent contracts than for flexible contracts. To give employers flexibility, an employee is allowed to work 30 per cent overtime (in addition to the fixed hours of the contract). If an employee works more than that 30 per cent in addition to the fixed hours, the higher WW premium applies retroactively for that whole year. âLargerâ employment contracts, with a fixed scope of 35 or more hours per week, are exempted from that rule. This exception will be widened from January 1, 2025 to contracts of 30 hours per week.
Abolition of gift deduction
In 2025, the deduction for entrepreneurs with regard to gifts will be abolished. This applies both to corporate income tax (VPB) donations and to donations in the âgiving from the companyâ scheme. Expenses that do remain deductible are advertising and sponsorship. Thus, donations are considered profit distributions on which tax has to be paid.
Income tax 2025; introduction of third tax bracket
A third tax bracket will be introduced. As a result, a lower tax rate will apply to the first part of income in box 1. Currently, two tax brackets exist in income tax for income from work and home. From 1 January 2025, these will become three tax brackets:
| Tax year 2024 | Tax year 2025 | ||
| Income box 1 | Income box 1 | ||
| Step 1 up to âĴ 75.518 | 36,97% | Step 1 up tot âĴ 38.441 | 35,82% |
| Step 2 from âĴ 75.519 | 49,50% | Step 2 âĴ 38.441 to âĴ 76.816 | 37,48% |
| Step 3 from 76.817 | 49,50% |
General tax credit goes down
The maximum amount of the general tax credit goes down from âĴ3,352 (in 2024) to âĴ3,068 (in 2025).
Home working allowance
The maximum untaxed home working allowance goes from âĴ 2.35 to âĴ 2.40 per day.
Maximum transitional compensation
The maximum transitional compensation, which was âĴ94,000 gross in 2024, will be increased according to contract wages. The maximum compensation for 2025 is not known at the moment.
Early retirement for heavy work
The government, unions and employers have reached an agreement on a structural early retirement scheme for people with heavy work. The current scheme, which belongs to the 2019 pension agreement, expires at the end of 2025. Under the new agreement, workers who really need it can retire up to three years earlier even after 2025.
People who retire early currently receive an amount comparable to a net state pension. In the structural scheme, an additional amount of up to âĴ3,600 gross per year is available for people on low incomes. In addition, the agreement focuses on sustainable employability, so that employees can reach retirement in good health.
Labour law changes
Changes to labour law are still in the offing. We will report on these changes as soon as more is known.
Bill Clarifying Assessment of Employment Relationship and Legal Presumption (VBAR)
This bill aims to reduce false self-employment and, to this end, fleshes out the so-called authority criterion from the employment contract. It also introduces a legal presumption based on an hourly rate of âĴ33 or lower. At such rates, labour is presumed to be performed on the basis of an employment contract. The Council of State is critical of this bill, but Minister Van Hijum of SZW has announced that he will send the bill to the House of Representatives before the end of this year. The intended entry into force date is 1 January 2026.
Bill to modernise non-competition clause
In March 2024, we already informed you about a bill limiting the possibilities to agree a non-competition clause. The main changes regarding the non-competition clause in the bill are:
- Competition clause limited in terms of duration to a maximum of 12 months;
- The geographical scope must be explicitly mentioned when drafting the non-competition clause;
- Indefinite employment contracts – as is currently the case for fixed-term employment contracts – must also include written reasons why the non-competition clause is necessary because of essential business or service interests;
- If the non-competition clause is invoked, the employer must pay the ex-employee compensation of 50% of the monthly salary for each month the non-competition clause is in force.
After the internet consultation closed, then-minister Van Gennip looked into the possibility of laying down by law that a non-competition clause is null and void if an employee earns one and a half times modal (âĴ66,000 gross per year) or less per year in full-time employment. In a parliamentary letter dated 17 June 2024, Minister Van Gennip indicated that it would be up to a subsequent cabinet to determine how the pros and cons surrounding the inclusion of the salary cap in the bill would be weighed. An effective date is not yet known.
Limitation of compensation transitional compensation
Currently, employers can ask the UWV to be compensated for the transitional compensation paid to long-term unfit employees. In the Budget Annex to the Framework Agreement, the new cabinet announced its intention to drop this compensation option for employers with 25 or more employees. This intention was confirmed in the Budget Day documents and it was made clear that from 1 July 2026, only employers with fewer than 25 employees will be entitled to compensation of the transitional allowance.
Questions or more information?
If you have any questions after reading the above or would like more information on certain topics, please feel free to contact us.