'Loonheffing'

The 'Loonheffing' is deducted from the employee's wage. The 'Loonheffing' consists of income tax and national insurance premiums. They are paid as a lump sum. The 'Loonheffing' is usually calculated by applying tables that are supplied by the tax authority. This is the 'Loonheffing' according to the normal rate.

Content

Calculation

The 'Loonheffing' is calculated over the 'Loonheffing' wage. The 'Loonheffing' wage is determined by increasing the 'SV' wage with the employer share of the national health premium and deducting the employer share of the 'WW' premium from the result.

In principle, the wage tax monthly table is also applied if an employee's salary is calculated and paid per month. And a similar method applies to the other period types. However, there are exceptions. The daily table should be applied to employees who did not start their employment on the first day of the period, but later on in the period. The same applies to employees who leave employment earlier in the period than on the last day.

Other situations:

  • Special income tax tables are applied for employees who receive holiday vouchers. The daily table is applied if, in a period, they work fewer days than the number of days in the timetable, and consequently have fewer wage days than working days. This applies to employees with fixed wages and to employees who work according to a timetable and are paid per hour.
  • An employee who receives holiday vouchers, works four days per week according to timetable. In this situation the period table is applicable. If, in a period, the employee works one day less, the daily table is applied again. If, in a period, the employee works one day more, the period table is also applied. If the employee works two days more, this second day (the sixth day of the week) is considered overtime. Depending on the situation, the second day is subject to the period table or the special rate.
  • The daily table is always applied to casual staff who receive holiday vouchers, but who do not have a timetable, except if the number of wage days equals the number of working days. In that case the period table is applied.

The daily table is applied by dividing the amount of 'Loonheffing' wage by the number of wage days and using the result to look for the corresponding amount of 'Loonheffing' in the table. This (daily) amount is then multiplied by the number of wage days.

A special rate is applied to special rewards such as the holiday allowance, a thirteenth month and overtime. This is a percentage that is applied to that part of the 'Loonheffing' wage that belongs to the special rewards. The percentage is determined annually by the legislator and depends on the amount of total 'Loonheffing' wage of the previous year. If an employee was not yet employed by his current employer at that time, the annual income is determined by the wage for the period of the employee's employment start date. This wage is converted to an annual amount, taking into account the holiday allowance, thirteenth month payment, etc.

If a wage calculation contains both a normal rate and a special rate, it can be more advantageous to apply the table for that special rate instead of the special rate percentage. This is called the advantage line. If the normal rate wage and/or the special rate wage is negative, the advantage line is not applied.

The employer uses the wage tax declaration to pay the 'Loonheffing' to the tax authority. Just as in the case of the 'UWV', a digital file containing the year-end work is sent for the final settlement towards the end of the year. In the wage tax declaration, the employer also lists the 'eindheffingen' and the 'afdrachtverminderingen'. 'Eindheffingen' apply to for example 'spaarloon' and 'premiesparen'. The employer has to pay 15% in 'Loonheffing' on both 'spaarloon' and 'premiesparen'. This is not deducted from the employee, but is entirely paid by the employer.

Negative 'Loonheffing' wage

Basically, the normal rate 'Loonheffing' wage and the normal rate 'Loonheffing' cannot be negative. Below are a number of examples of situations that have been submitted to the tax authority, plus the authority's response.

Question:

Suppose you only have normal rate 'Loonheffing' wage and that this is negative. Officially there are no income tax tables that deal with this situation. In practice, in a lot of payroll packages the sign is simply reversed, the 'Loonheffing' looked up in the table, and the sign of the 'Loonheffing' amount then reversed again. Is this allowed?

Answer:

This is not allowed. There can only be one reason for a negative wage: the employee received too much wage in the previous year which now has to be refunded. But if this is more than the normal rate 'Loonheffing' wage in the settlement period, this should still not be negative. In that case a part should be transferred to a future period.

Question:

But what should an employer do if the employee left employment last year, and the year-end work has already been submitted?

Answer:

You can no longer correct the salary administration. The numbers are correct. This is because the numbers in the salary administration are also known to the tax authority and therefore they match. The problem that the employer has is that the personnel costs for 2002 are too high. The employer has to reclaim the GROSS amounts from the employee. This means that the employee pays back too much. However, he can enter this as negative wage in the income tax declaration and ask for a refund in that way. The employer corrects the personnel costs with the gross amounts in the financial administration.

Question:

An employee has a (normal rate) salary and a deduction for a private PC (normal rate). Salary -/- Private PC results in a negative normal rate 'Loonheffing' wage. Is this allowed?

Answer:

No, this is not allowed. You are always legally obliged to pay the minimum wage. Therefore, an employee who earns the minimum wage, cannot as such take part in a private PC project. In this case the only thing you can do is reduce the salary in the subsequent periods, provided that at least the minimum wage is paid. If all this is not possible, and you want to settle anyway, you have to submit an appeal or come to an arrangement with the tax authority.

Question:

An employee has a (normal rate) salary, a deduction for a private PC (normal rate), overtime (special rate) en leave hour payment (special rate).

Salary -/- Private PC results in a negative normal rate 'Loonheffing' wage (suppose -/- 300). Overtime and leave hour payment result in a positive special rate 'Loonheffing' wage (for instance 2000). Is it allowed to apply the advantage line to 1700? Or should the special rate be calculated on 2000 and no or a negative "Loonheffing' (refund) on 300?

Answer:

It is not allowed to apply the advantage line. What is more, the normal rate 'Loonheffing' wage cannot be negative (see also the previous question and answer). So the special rate needs to be applied to 2000. Apart from that, you are allowed to apply the normal rate to overtime work that is not incidental (and therefore happens quite often). Leave hours can be paid out at both the normal and special rate. But you do not solve this by applying the advantage line. You have to adjust the configuration of that component to make it a component the table is applied to.

Question:

In a period an employee has both a salary and leave hours that are deposited into the 'levensloop'. These leave hours are processed at the special rate. Since this is a deduction, the special rate 'Loonheffing' wage is negative, and the resulting special rate 'Loonheffing' is positive (a payment). Does the tax authority allow this approach?

Answer:

Yes, AFAS has verified this with the tax authority. This approach is correct.

In this situation (deduction at normal rate and payment/addition at special rate) you can apply the advantage line.

Information

Information about 'Loonheffing' calculations, the income tax tables and the tables for 'afdrachtverminderingen', 'eindheffingen'', etc. is available from the tax authority. Please visit www.belastingdienst.nl.

Conversion rule for seconded employee

Question:

An employee is seconded as from 1 July. From that moment on, he is only obliged to pay premiums. In this case conversion rule A applies. 'Loonheffing' has been deducted from the employee's wage over the first six months in accordance with the table. With regard to the deduction, conversion rule A has an annual maximum. This means that the national insurance premiums over the first six months should be taken into account. However, these national insurance premiums are a part of the 'Loonheffing' that has been calculated. Conversion rule A does not provide for this.

How can this be solved?

Answer:

Profit does not provide a solution for this situation because it only rarely occurs. Two alternative solutions are possible.

Solution 1

You can use the 100.006.500 'Loonheffing (rekencomponent)' wage component. This wage component ensures that the 'Loonheffing' resulting from the conversion rules is calculated correctly. If a conversion rule applies to a part of the year only, this wage component takes this information into account.

The comments on the wage component explain how to apply the wage component.

Note:

If any 'Loonheffingen' were calculated without applying the conversion rule in the first half of the year, conversion rule A results in an incorrect 'Loonheffing'.

The reason for this is that the maximum of conversion rule A should only be compared to the national insurances. Now Profit compares it with the wage tax and the national insurances, because it is an integral part of the 'Loonheffing'. As a result, the maximum is reached much earlier and Profit does not carry out any further calculations or does not refund any 'Loonheffing'.

You can solve this as follows:

In the 100.006.500 'Loonheffing (rekencomponent)' wage component you can set the 'Herleidingsregel' parameter to 3 'Only liable for premiums (A,G)' as from 01-01 of the year in question. In addition to a start date for the parameter value, you also enter 31-12 of the year in question as the end date. The 'Loonheffing' is subsequently corrected automatically using the 100.006.003 'Extra loonheffing' wage component.

Solution 2

The employee can use the income tax declaration to have the wage tax corrected afterwards.

Solution 3

To reach a solution while using Profit, you can also take the following steps. We recommend that you first try this in a test environment.

  1. Process the entire year and determine the payments.
  2. Process the entire year with conversion rule A (only liable for premiums)----> premium owed (for instance X).
  3. Process the first half of the year using conversion rule B (only liable for tax)----> premium owed (for instance Y).
  4. X + Y is the total annual payment.
  5. The difference with the calculation result in Profit, can be added or deducted using 100.006.003 'Extra loonheffing' wage component.

Casual staff with daily table

If you process the wages of a casual employee using the daily table and Profit does not calculate any 'Loonheffing' for this casual employee then this is because Profit has set the upper limit for the 'SV' days to the number of working days in the contract.

You can change this at the employee level.

To change the upper limit:

  1. Go to:HR / Employee / Employee.
  2. Open the properties of the employee.
  3. Go to the tab:Wage component.
  4. Click on: New.
  5. Select the 100.000.118 'SV Dagen' wage component.
  6. Click on: Finish.
  7. Open the properties of the 'Niet maximeren' parameter.
  8. Click on: New.
  9. Enter the start date.
  10. Select the Apply check box.
  11. Click on: Finish.