Hi esher,
The following brochure, issued by the Ministry of Finance, will answer
many of your questions regarding wage tax. I've copied and pasted
relevant sections below but please click on the link for full details.
BROCHURE (issued by the Ministry of Finance):
Taxation in the Netherlands 2005
2.1 General
"Everyone in the Netherlands who is in paid employment is subject to
wage tax. The employer or entity that pays the wages withholds the
wage withholding tax and pays it periodically to the tax
administration. The wage withholding tax consists of one amount made
up of wage tax and social security contributions. Social security
contributions must be paid for the old age pension (aow), surviving
relatives benefit (Anw) and exceptional medical expenses (awbz).
Individuals working in the Netherlands generally have social security
coverage and must therefore pay social security contributions. An
exception to this may, for example, apply in the event of (temporary)
secondment.
The party withholding deductions is known as the withholder; this is
the party that files the tax return. The party whose wages or
allowances deductions are withheld is known the (deemed) employee. The
wage withholding tax is an advance tax payment for the income tax.
This means that a person does not have to pay a single large payment
for income tax and social security contributions once a year. The wage
withholding tax is withheld when an individual receives his wage
payment."
http://www.minfin.nl/default.asp?CMS_ITEM=MFCWDC2F205EF69A34FF39512AF36BA8E800DX2X55618X27
-What is the Dutch equivalent of the UK's pay as you earn system (PAYE) called?
Wage tax (advance levy in respect of income tax)
"In order to avoid a person having to pay a single large payment for
income tax and social security contributions each year, two types of
withholding tax have been introduced. One of these is the wage tax.
This withholding tax payment is made at the time the income is
received. The employer withholds the wage tax and social security
contributions. This is called wage withholding tax."
Wage tax return
"The party withholding tax (the withholder), generally the employer,
must file a tax return with the tax administration and periodically
pay tax. The amount to be paid must be entered on the form ?Aangifte
loonbelasting /premie volksverzekeringen?. This tax return form is
sent by the tax administration a number of days before the end of the
period over which wage tax must be declared and paid.
The withholder must complete and send the tax return within a month
after the end of the tax return period and must also pay the wage tax
within a month after the expiry of the tax return period. Those who do
not file tax returns on time, or do not file the tax return correctly,
may be subject to an additional tax assessment and/or a penalty.
As from 1 January 2006, it will become compulsory to file income tax
returns for tax return periods electronically. Employers will file one
joint return for wage tax and employees? social insurance
contributions electronically: the wage return."
http://www.minfin.nl/default.asp?CMS_ITEM=MFCWDC2F205EF69A34FF39512AF36BA8E800DX2X55618X27
-If it exists, what is the standard rate of tax that shoudl be
deducted at source under this system? (the staff are full and part
time sales personnel in a retail shop)
Rates
Tax on taxable income for income from work and dwellings (box 1) is:
? The first bracket: 34.40% on the first H 16,893.
This rate comprises 1.80% tax and 32.60% social security contributions.
? The second bracket: 41.95% on the next H 13,464.
This rate comprises 9.35% tax and 32.60% social security contributions.
? The third bracket: 42% on the next H 21,405. This rate consists solely of tax.
? The fourth bracket: 52% on the excess. This rate also consists solely of tax.
Taxpayers aged 65 or older are taxed at a rate of 16.50% in the first
bracket and 24.05%
in the second bracket because persons over the age of 65 are no longer
required to pay
old-age pension (aow) contributions.
http://www.minfin.nl/default.asp?CMS_ITEM=MFCWDC2F205EF69A34FF39512AF36BA8E800DX2X55618X27
-What are the statutory benefits (travel, health and holiday
entitlement) for these temporary members of staff
EMPLOMENT/LABOUR LAWS NETHERLANDS
Mandatory provisions include:
1. The Working Conditions Act, which contains rules regarding the
health and safety of employees in the workplace.
2. The Working Hours Act, which restricts working hours
3. The Minimum Wage and Minimum Holiday Allowance Act, which
determines that an employer must pay a minimum gross salary per month
(based on full-time employment) and that the employee has a statutory
right to a holiday allowance, amounting to at least 8% of the gross
salary.
Other provisions of employment law with mandatory force include:
1. The prohibition on giving notice of termination to a sick
employee for the first two years of his incapacity to work due to his
sickness.
2. The continuation of payment of salary during the first 104 weeks
of an employee's sickness.
3. The requirement to obtain governmental consent before an
employer can give notice of termination.
STATUTORY HOLIDAYS
The minimum statutory holiday entitlement is four times the agreed
weekly working hours. For full-time employees, this amounts to 20 paid
vacation days in addition to public holidays (about ten). In practice,
holiday entitlements are usually higher (about 25 days is common),
either based on a collective bargaining agreement or an individual
employment agreement.
Employees must use up their vacation days and cannot take pay in lieu
of the statutory minimum vacation days during the existence of the
employment agreement. However, employees can take pay in lieu of
holiday entitlements that exceed the statutory minimum. On termination
of the employment agreement, the employee is entitled to compensation
for all outstanding holiday entitlements.
http://www.helplinelaw.com/law/netherlands/employment%20laws/employment.php
Labour and Employee Benefits: The Netherlands
A Q&A guide to labour and employee benefits in The Netherlands.
http://www.practicallaw.com/4-102-9741
"Although on the average salaries are lower in the Netherlands than in
Germany work contracts are normally set out with much greater
flexibility and may differ substantially with regard to additional
social employee benefits. In this respect, some companies will grant
their employees in excess of the statutory 20 days of vacation per
year. Even vacation allowances or Christmas allowances are negotiable.
In most cases, between 38 to 40 hours per week are required for a full
time job."
http://www.stepstone.se/home_fs.cfm?contentpage=http://www.stepstone.se/content/SE/netherlands.htm
1. Temporary labour contract
http://www.expatax.nl/workcontracts.htm
"In the Netherlands there is no difference in treatment with respect
to temporary workers. On 1 January 1999 the act on 'Flexibility and
Security' came into force and since then temporary work is regarded
and treated as normal work (see also NL1110). In addition to this
legislation, the CAO of the temporary work agency or of the hiring
company are applicable."
http://www.eiro.eurofound.eu.int/1999/09/word/nl9907155s.doc
Employee insurance
* The Sickness Benefits Act: under this Act, employers have to pay
employees 70% of their salary during their first year on sick leave.
That also includes pregnancy, childbirth and organ donation. Women are
entitled to sixteen weeks? maternity leave on full pay.
* The Unemployment Insurance Act (WW): this Act insures employees
below the age of 65 against the financial consequences of
unemployment. Under certain conditions, they receive 70% of the
minimum wage for the first six months. Other conditions apply for
earnings-related unemployment benefit. The duration of
earnings-related benefit varies from six months to five years
depending on the claimant's working history.
* The Invalidity Insurance Act (WAO): this Act insures workers
against the risk of losing income through prolonged illness or
disability. To be eligible, they have to meet a number of criteria.
For instance, they must have been at least 15% unfit for work for 52
weeks. Invalidity benefit is paid for five years. The claimant then
has to put in a new application. The size of the benefit depends on
degree of invalidity, earnings and age.
* The Health Insurance Act: this provides cover against the costs
of medical and paramedical treatment, hospitalisation, and some dental
treatment. The scheme is implemented by several public health
insurance funds.
http://www.minbuza.nl/default.asp?CMS_ITEM=MBZ302327&CMS_NOCOOKIES=YES
-Is there a benefit to the company of operating a monthly pay system
over a weekly one? I understand that this may make it easier to
calculate.
Sure, for the employer a monthly pay system would result in easier
accounting but as far as the wage tax goes, it doesn't really matter
because a percentage would be calculated on the wages paid, whether on
a weekly or monthly basis.
2.6 Wage tax return
"The party withholding tax (the withholder), generally the employer,
must file a tax return with the tax administration and periodically
pay tax. The amount to be paid must be entered on the form ?Aangifte
loonbelasting /premie volksverzekeringen?. This tax return form is
sent by the tax administration a number of days before the end of the
period over which wage tax must be declared and paid.
The withholder must complete and send the tax return within a month
after the end of the tax return period and must also pay the wage tax
within a month after the expiry of the tax return period. Those who do
not file tax returns on time, or do not file the tax return correctly,
may be subject to an additional tax assessment and/or a penalty. As
from 1 January 2006, it will become compulsory to file income tax
returns for tax return periods electronically. Employers will file one
joint return for wage tax and employees? social insurance
contributions electronically: the wage return."
http://www.minfin.nl/default.asp?CMS_ITEM=MFCWDC2F205EF69A34FF39512AF36BA8E800DX2X55618X27
Additional Links of Interest
The Salary Check in the Dutch WageIndicator Websites
http://www.wageindicator.org/userimg/files/salary.pdf
Supplying staff to Dutch businesses
http://www.belasting-service.nl/payroll.htm
Salaries tax
"Salaries Tax and Social Security contributions are levied jointly and
are automatically withheld by the employer. The salaries tax serves
as an advance charge, and is issued with an income tax return and
assessment.
"If your only income is from one source at a regular salary, there
should be no bill at the end of the year, but you can then file for a
refund from your deductions and allowances."
http://www.expatica.com/source/site_article.asp?subchannel_id=2&story_id=785&name=Expat+tax+in+the+Netherlands+explained#5
How to get the same benefits as a Dutch worker
http://www.expatica.com/source/site_article.asp?subchannel_id=75&story_id=431&name=How+to+get+the+same+benefits+as+a+Dutch+worker
Netherlands Nomenclature
http://www.oecd.org/dataoecd/50/54/33743769.pdf.
I hope I've covered all of your concerns. If not, or if you have any
questions, please post a clarification request and wait for me to
respond before closing/rating my answer.
Thank you,
hummer
Google Search Terms Used:
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netherlands statutory benefits
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