17 September 2019 – There are numerous subsidies that employers such as yourself can utilise to reduce wage costs. The benefits can add up to quite substantial amounts. As there have been a number of changes, we will summarise them for you below.
Wage cost benefits (LKV)
With effect from 1 January 2018, there are 4 LKVs:
LKV for older employees
Do you intend to employ an employee aged 56 or older? If so, you may be eligible for this subsidy (subject to a maximum of € 18,000 over 3 years, € 3.05 per remunerated hour). The main condition is that employees come from a situation in which they received benefits (for instance, under the Unemployment Benefits Act (WW), Occupational Disability Insurance Act (WAO)/Work and Income (Ability to Work) Act (WIA), or the Work and Social Assistance Act (Abw)) and are assisted in their return to work. A target group statement needs to be applied for to that end. You can claim this subsidy by requesting it in the payroll tax form.
Did you know that this LKV can also be applied for on behalf of employees receiving foreign benefits that are comparable with Dutch benefits?
- LKV for occupationally disabled employees
This LKV applies to persons who are occupationally disabled and receive assistance to find a job again, such as employees who previously received benefits under the Work and Income (Ability to Work) Act. A target group statement also needs to be applied for with regard to this subsidy. You must do so within three months after the employment commences. The subsidy is € 3.05 per remunerated hour and is subject to a maximum of € 18,000 (over 3 years). No minimum age limit applies.
LKV for the target group covered by the employment targets and quotas agreement as well as those under the age of 18 who are unable to follow or complete their education due to illness or disability
An LKV is available for workers who are part of the target group under the employment targets and quotas agreement. These employees receive benefits under the Invalidity Insurance (Young Disabled Persons) Act (Wajong) or are subject to a special needs decision for sheltered employment, the so-called 'practical route', employees under the Jobseekers Employment Act (Wiw) or with an entry-level and step-up job (ID-baan), and employees who have been designated as occupationally disabled.
You can also receive an LKV if an employee belongs to the group under the age of 18 who are unable to follow or complete their education due to illness or disability (scholingsbelemmerden). These employees experienced difficulties in following education owing to illness or disability and are employed by you within 5 years of completing that education. The Employee Insurance Agency (UWV) must issue a statement to this end, stating that the employee belongs to the target group. The subsidy is € 1.01 per remunerated hour and is subject to a maximum of € 6,000 (over 3 years).
- LKV for redeploying occupationally disabled employees
You are entitled to this benefit if you redeploy an occupationally disabled employee. Redeployment applies if an occupationally disabled employee starts working for you again in full or in part, whether in their previous position or in a different position. An occupationally disabled employee is an employee receiving benefits under the Income (Ability to Work) Act (WIA), the Occupational Disability Insurance Act (WAO) or the Work and Care Act (WAZ). A target group statement from the Employee Insurance Agency is also required for this LKV. The subsidy is € 3.05 per remunerated hour and is subject to a maximum of € 18,000 (over 3 years).
Low income benefit (LIV)
If you employ workers with a low income, you may be entitled to an allowance for the wage costs through the low-income benefit (lage-inkomensvoordeel, LIV). This regulation is already available for 2017 as well. An important condition is that the employee works at least 1,248 hours in a year for the employer. The average hourly wage must not be lower than 100% of the statutory minimum wage (WML) or exceed 125% of that wage. The maximum benefit is € 2,000 per employee per year and is only paid out in the next year. No special application is required for this purpose.
A new feature with effect from 2018 is an allowance for the wage costs of young employees. Depending on the age of the employee, the allowance can be up to € 3,286.40 per employee per year. These employees must have been aged 18, 19, 20 or 21 on 31 December 2017. The amount depends on the number of remunerated hours. In addition, the employee must receive an average hourly wage that is in accordance with the statutory minimum youth wage for their age. The exact amounts for the various ages are yet to be determined. No special application needs to be made for this LIV.
The term 'remunerated hours'
The amounts of the subsidies referred to above depend on the number of ‘remunerated hours’. For this purpose, it is important to record these remunerated hours correctly in the payroll records, as they are the basis for benefit calculations.
Remunerated hours are hours for which you pay wages. This category includes hours worked, for instance, but also hours when employees were sick (hours not worked but nonetheless paid in full). The same applies to travel time that is paid. Leave hours not taken that are paid out also qualify as remunerated hours.
Payment for 2018 in 2019
The subsidy is granted in retrospect (unlike contribution discounts, which immediately result in lower payroll tax payments to the Dutch Tax and Customs Administration). In other words, the subsidies that were claimed for 2018 will only be paid out in the course of 2019 (on 12 September 2019 at the latest).
Transitional arrangements for existing premium discounts
The wage cost benefits replace the premium discounts. Transitional arrangements apply to existing premium discounts. The premium discount for ‘young employees’ was discontinued with effect from 1 January 2018.
Of course, the subsidies above are subject to various conditions. If you believe that one of the subsidies described above may apply to you, please do not hesitate to contact us. We will be pleased to advise you on this subject.
Want to know more?
If you want to find out more about the wage cost benefits or LIV, you can contact Marco Zimmerman by email or by phone on +31 (0)88 277 20 65. He will be happy to assist.