The wage tax statement is a form that usually has to be completed and signed before starting employment. A wage tax statement must be completed for the Dutch tax authorities. In the wage tax statement, the -future- employee indicates whether he or she wishes to be eligible for a wage tax credit.
Payroll tax is the tax that the employer already pays to the Dutch tax authorities, so that the employee does not have to do this afterwards. Payroll tax is the collective name for:
- Payroll tax
The payroll tax can best be seen as a withholding tax on the income tax, which we all owe in the Netherlands.
- National insurance contributions
Payroll tax credit
Tax credits are tax rebates. As a result, the employee pays less tax. If an employee works as an employee, the employer takes the general tax credit and the employed person’s tax credit into account. These discounts constitute the wage tax credit. As a result, the employee pays less wage tax and the employee is paid more wages.
Why does a wage tax statement need to be completed?
An employer needs to know whether the wage tax credit should be applied for an employee or not. That is why an employee receives a wage tax statement from the employer for his or her employment. This statement is also known as an LB-statement. The employee must truthfully complete and sign this form. The employee then hands over the wage tax statement to the employer. On the basis of this statement, the employer knows which tax and which tax credits must be applied to the salary. In addition, the employer must keep the wage tax statements of the employees in file.
Please note, however, the employee is not obliged to provide the employer with a completed and signed wage tax statement.
If the employee does not provide this information, the tax credit will not be taken into account. In addition, 52% of wage tax and national insurance contributions are withheld by the employer.
If an employee has several employers at the same time or receives a benefit in addition to a job, the employee may only apply the wage tax credit to 1 employer. If an employee has a wage tax credit applied by every employer, the employee will receive too much tax credit. As a result, the employee will probably must pay tax to the Dutch tax authorities afterwards.
How can you see whether the wage tax credit is being applied?
On the pay slip created by AAme, it is stated in the bottom left row: tax credit. If it says ‘Yes’, the wage tax credit will be applied. The employer must check whether the wage tax statement is in the administration of all employees whose pay slip states ‘Yes’. If this is not the case, we advise the employer to print out the wage tax statement and to present it to the employee with the request to complete and sign the statement. Please keep the original statement in your own records and email us a copy. We can of course also provide you with a statement model for the wage tax (student and school scheme).
Part of the Wage tax statement
Change wage tax credit
If an employee wants to change the wage tax credit, print out the wage tax statement again and hand it over to the employee with the request to fill in and sign the statement. Do not throw away the old statement, keep it! The Dutch tax authorities usually check for previous years. It may be that the statement applies in the year for which a possible audit takes place.
If the employment with the employee has come to an end, the employer must keep the wage tax statement at least five years after the end of the calendar year in which the employment relationship ended in the administration.
During an audit by the Dutch tax authorities, the wage tax statement may be requested. If the wage tax credit is applied to an employee, the employer must be able to demonstrate that the employee has submitted this request to the employer in writing (this is the wage tax statement stating that the employee wishes to apply the wage tax credit). If the employer applies the wage tax credit and the employer cannot provide proof of this, the Dutch tax authorities can impose a fine on the employer. In addition, the employer may also have to pay tax and/or fines to the tax authorities. These are costs for the employer that cannot be recovered from the employee.