More wage tax tables in 2019 – resident or non-resident?

As of 1 January 2019, there will be more wage tax tables. This is due to the difference between residents and non-residents of the Netherlands for the tax credits. And because some tax treaties have been adjusted, there are white tables for all conversion rules from 1 January 2019.

In the wage tax tables, a distinction is made between three groups of employees from 2019:

  1. employees who are residents of the Netherlands;
  2. workers who are residents of another EU Member State, of an EEA country (Iceland, Norway and Liechtenstein), Switzerland or the BES islands (Bonaire, Sint Eustatius and Saba);
  3. workers who are residents of a third country, that is to say, of a country not covered by 1 or 2.

For all current payroll tax tables, three separate payroll tax tables will be published next year, one for each of the three groups of employees.

In 2019, for example, there are three white monthly tables.

Tax component tax credits

You must determine with effect from 2019 whether or not you have to take into account the tax part of the tax credits for an employee. And whether you may only have to take into account the tax part of the employed person’s tax credit. You need to know for which country an employee is a resident, so that you can use the correct wage tax table. As a result of this change, new wage tax tables will be introduced.

Only residents of the Netherlands are entitled from 1 January 2019 to the tax component of the payroll tax credit.

Non-residents are only entitled to the premium component if they are insured for national insurance in the Netherlands.

For the tax part of one of the tax credits, the employed person’s tax credit, an exception applies:
employees who are residents of another EU Member State, of an EEA country (Iceland, Norway and Liechtenstein), Switzerland or the BES islands (Bonaire, Sint Eustatius and Saba) are entitled to the tax part of the employed person’s tax credit.

Resident of the Netherlands or not?

An employee who has his permanent place of residence or residence here is a resident of the Netherlands. He is therefore entitled to the tax part of the tax credits.

An employee who lives or resides both in the Netherlands and abroad is only a resident of the Netherlands if his social and economic life takes place here.

For example, if the employee’s family lives abroad, his children go to school there and he holds bank accounts there, he is not a resident of the Netherlands. He is not entitled to the tax part of the tax credits.

With an employee without a family, his intention is important:
if he wants to settle here, he is a resident of the Netherlands. If he plans to stay here only for a short time, he is not.

You determine on the basis of the facts and circumstances that you are aware of which country an employee is a resident. For example, you rely on the place of residence that the employee has provided to you as one of the details for the payroll taxes, travel expenses you pay him and data for the assessment of the insurance obligation.

Residence declaration

If you have reason to doubt, you can ask the employee for a residence certificate. You then know for sure which country the employee is a resident of. The employee can apply for the residence certificate at the tax office under which he falls. That can also be abroad.

Prepare yourself

Do you employ foreign employees? In that case, the payroll administration must be adjusted to the new variants in the payroll tax tables. In consultation with the payroll administration, the residences of your current employees must be mapped, so that the correct payroll tax table is applied next year.

Inform the foreign employees who will no longer be entitled to the tax part of the tax credits on this before the first wage payment in 2019. Depending on the level of the wage and the country of residence of the employee, they will be reduced net.