Vacation Pay and Other Special Allowances in 2016

By: Together Abroad 27-06-2016

Categories:* Daily employment news, * Salary, ** HR Compensations & Benefits,

As of 2016 onwards, employers and Labour Offices should include the taxes on special allowances such as holiday pay, bonus or the 13th month in a different way. This makes the net wage different from what people were accustomed to.
Employers and Labour Offices are taking the tax on the wages of their employees or beneficiaries, and then paying it to the tax authorities: the payroll tax. Withholding income tax is done according to certain tables.
As holiday pay or other special remuneration is paid at once, the employer or benefits agency will withhold deductions, same as of the monthly salary or benefits. From 2016 the employer or benefit agency could, for this purpose, use the table for special benefits. This table takes in consideration that the labour tax creditdepends of the income.
Because the payroll tax about holiday and other special allowances has changed, a different amount of tax is paid now:
With an annual income of about €18,000 you pay less tax and you get more vacation pay.
If the annual income exceeds €18,000, then you pay more tax and you get less vacation pay.
There is also less difference between the payroll tax that the employer retains and the income tax that the employee has to pay himself. In this way,at the income tax assessment the chances are smaller for the employeeto pay more, or for the employer to get back large amounts.
Special allowances include:
• Vacation pay
• 13th month
• Gratification
• Bonus payment
• Overtime
• Compensated vacation days
• Supplementary payments
Source: http://www.salarisnet.nl/