The emergency taxation rate is the default rate an employer is required to apply to an employee’s payroll if documentation of the employee is not considered sufficient. The result this emergency tax rate has on your employees is:
1. 52% wage tax deduction.
2. The maximum premium wage for the social debts is not taken into account. 3. The application of the wage tax discount is not possible.
Of course this is not a desirable situation for the employer or employee.
First of all, you as employer are required to properly determine the identity of the employee and collect all required information for the employee’s file. It is important that this occurs before the employee actually commences work.
Secondly, you are obliged to possess a wage tax declaration signed by the employee. You may create this form yourself, although in most cases employees make use of the template form which can be found on the website of the Dutch tax authority. The employee is required to submit a hard copy of this signed and dated form before it can be taken into consideration.
If the details supplied by the employee is incomplete or incorrect, the employer is obliged to apply the emergency rate of taxation automatically.
An employer is not permitted to apply the emergency tax rate without reason. The employer is required to as a minimum hold identification of the employee on file. Therefore, a copy of the identification card may be sufficient. The Dutch tax authority verifies if there are other obligations in the form of a work and residency permits. Dutch authorities also inspect the operation of the employer with regards to laws for foreign workers.
You risk a penalty of up to €4.920,00 if you fail to apply the emergency taxation rate without having a suitable copy of your employee’s ID on file. The employee is likewise obliged to allow their identification to be inspected by their employer. In the event the employee fails in this regard, he or she may also receive a penalty.
Questions? Contact us via 020-716 33 84
Source: Handbook Wage-Taxes Belastingdienst 2014
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