Key tax tips for employers and employees

Pseudo self-employment of self-employed people (zzp’ers)

As of 1 January 2025 the Dutch Tax Authorities will start enforcing again on pseudo self-employment of people registered as self-employed people (‘zelfstandigen zonder personeel’ or ‘zzp'ers’). This means that if the Dutch Tax Authorities conducts a tax audit and concludes that the self-employed people are fiscally equal to employees, Dutch payroll taxes will be due on the amounts paid out. This can lead to additional tax assessments, including penalties. It is important to timely prepare your organization for this new situation.

Work-related costs scheme

At the end of the year, it is time to assess whether the final tax levy of 80% is owed by your organization. For the year 2025, the work-related costs scheme (‘werkkostenregeling’ or ‘wkr’) will be 2% of the total wage bill up to 400,000 euros (2024: 1,92%). Above 400,000 euros, the wkr rate will be 1.18% (2024 and 2025). These are the same percentages as in 2024. If you compensate and provide more to your employees, you as an employer will owe a final tax levy of 80%.

Highly skilled migrants and employees with 30% ruling

As an employer, it is possible to employ a highly skilled migrant from a non-European country. This highly skilled migrant is subject to a salary criterion in order to meet the highly skilled migrant scheme. In addition, the employer may also employ employees with a 30% ruling (expat tax regime). A salary criterion also applies to these employees (with 30% ruling). It is important to have insight into whether the applicable salary criteria are met before the end of the year and whether you still need to make additional payments to meet the minimum salary rules.

Expat tax regime: from 30% to 27% ruling

For certain employees who come to The Netherlands from another country to work here, their employer may give untaxed reimbursement (specific exemption) of certain additional costs due to temporary work and residence in The Netherlands. These additional costs can be reimbursed on a claim basis, but it is also possible, under certain conditions, to apply a so-called 30% ruling (expat tax regime) from the Dutch Tax Authorities. By applying a 30% ruling, an employer can reimburse up to 30% of the salary untaxed without further substantiation of the costs.

To avoid alternating between applying the expat tax regime (30% ruling) and reimbursing actual costs, an explicit choice must be made between the two schemes starting in 2023. The choice applies per calendar year.

From 2027, the percentage of the current 30% ruling is likely to be reduced to 27%. Expats who used a 30% ruling before 2025 may continue to apply 30% after 2027. For expats applying a 30% ruling from 2025, a percentage of 27% will apply from 2027. It is therefore important to have a clear understanding of which employees fall under which percentage from 2027.

Another important change regarding the 30% ruling (expat tax regime) will apply from 2025. Accordingly, the partial foreign tax liability scheme for personal income tax purposes will be abolished; this may have a financial impact on the expat's personal income tax liability. A transitional arrangement does apply. It is important to identify which employees will be affected and inform them about this substantial change.

Information reporting obligation

If you are a withholding agent for Dutch payroll taxes and you have made payments to individuals who are not employed by you, you are obliged to provide the Dutch Tax Authorities with certain information (i.e. ‘information reporting’). This obligation applies to payments made to individuals:

• who are not employed by the withholding agent; and
• who do not invoice, or invoice without VAT.

The latter is the case if the invoice states 0% VAT, €0 VAT or no VAT at all (e.g. because there are exempt services or because the person falls under the ‘KOR’). The obligation to provide information also applies if the invoice states ‘reverse charge VAT’.

The obligation to provide information does not apply if the tax-free volunteer scheme or the artist and professional sportsmen scheme can be applied. The following information must be submitted before 1 February of the year following the year in which the payment takes place:

• the amount that is paid out;
• the date on which the payment is made;
• some details of the person to whom payment is made:
  - citizen service number (‘BSN’);
  - name;
  - address; and
  - date of birth.

VAT deduction limit on employee benefits and corporate gifts (BUA)

If you have deducted VAT on expenses for corporate gifts or employee benefits during 2024, an annual review is required to assess whether the deduction can actually be maintained. This is because entrepreneurs can only deduct VAT on expenses for employee benefits or other corporate gifts if they do not exceed the threshold amount. If you have favored one or more employees (or relations) for more than 227 euros (excluding VAT), the VAT cannot be deducted retroactively, and a correction is required. A separate calculation applies here for food and drinks for employees. From 2024, the own contribution of employees no longer applies as a deduction on expenditure, so the total expenditure must be assessed against the threshold amount. Special attention is required for items such as home working facilities, both whether the VAT is deductible and whether this expenditure leads to a BUA correction.

VAT correction for private use of company car

If you provide a lease car to your employees and the car is also used for private purposes, an end-of-year correction is mandatory in the last VAT return of the year. A flat rate of 2.7% (or 1.5% in specific cases for cars that have been in use for more than 5 years) can be used for this purpose.

Please note that commuting is also private for VAT purposes (unlike for payroll tax purposes). A ‘no private use’ declaration for payroll tax purposes cannot exclude a VAT correction. Moreover, the 500km limit does not apply as well for VAT purposes (as is the case for payroll tax purposes).

Want to know more about the above year-end tips?

Would you like to know more about a subject from these year-end tips? Your Forvis Mazars tax advisor is more than happy to assist you further.