If you have multiple incomes in the Netherlands, such as a combination of salary and benefits, it is important to pay attention to payroll tax. Payroll tax is a prepayment on income tax that your employer or the UWV withholds and pays directly to the Tax Authorities. Correctly applying the payroll tax credit is crucial here.
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Payroll tax credit
Everyone in the Netherlands is entitled to a wage tax credit: a tax reduction that ensures that you pay less tax and therefore keep more net salary. However, it is not permitted to apply this reduction to multiple incomes at the same time. If you do this, for example to both your salary and your benefit, you run the risk of a significant additional assessment from the Tax Authorities. This also applies to pensioners who have the payroll tax reduction applied to both their AOW benefit and to one or more pension benefits.
Multiple isources of income
If your income consists of both wages and benefits, you can consider asking the UWV to pay your benefit gross to your employer. Your employer is then obliged to pay the total amount (wages and benefits together) to withhold and pay payroll tax. This ensures that payroll tax on all your income is arranged by one agency, which reduces the chance of errors is reduced and you do not accidentally apply the payroll tax credit twice. In addition to the addition of both sources, a higher labor tax credit can reduce the payroll tax to be paid, which can potentially lead to a considerable net benefit.
Design
It is advisable to apply the payroll tax credit to the income for which you receive the highest salary or benefit. In this way, you prevent paying too little tax and later being confronted with a supplementary assessment.
More information
Do you have any questions about the application of the payroll tax credit in your specific situation? Please feel free to contact the Service Center of De UnieThey are available on workdays from 8 a.m.:30 to 17:00 hrs via sc@unie.nl and 0345 851 963.
