Employment tax credit

The employee with real employment duties or notional employment duties receives earnings for current employment. In this case he has a right to the employment tax credit. The tax credit is a percentage of that wage, subject to a ceiling. If an employee is 56 years old or younger at the beginning of the period, they have a right to an employment tax credit with a maximum of € 1,574. The credit is included in the payroll tax tables  (loonbelastingtabellen) and the calculation rules (rekenregels). Employees who are 57 or older, but not yet 64 at the beginning of the period are entitled to a higher employment tax credit, as long as their earnings from current employment are higher than € 9,209. If the earnings of an employee are higher than € 44,126, the amount of the tax credit is reduced. The reductions of the tax credit are included in the white period tables and the calculation rules. 

Earnings
The employment tax credit is only calculated over regular wages and not over one-off benefits or remunerations that are given only once per year, such as bonuses, royalties or holiday pay. In addition to earnings from current employment, also considered in the calculation of the employment tax credit are; earnings from temporary incapacity, benefits for the financing of a career break (Work and Care Act) and any supplements thereto by the employer.

Administration
For every wage period you must keep track of which amount of employment tax credit is withheld against the payroll tax/national insurance contributions of the employee. For this reason the employment tax credit is included in the white period tables. You state the withheld employment tax credit in column 18 of the pay slip (‘verrekende arbeidskorting’). You must also specify the total amount on the annual statement of the employee and they must specify this on their income tax return accordingly. The tax credit which the employee receives via their income tax return will never be less than the amount that you as an employer have calculated and will never exceed the limit which applies for that particular employee.