To make it more attractive for employers in The Netherlands to hire and keep people with low wages, it is possible to get compensation for the wage costs of these employees. In this article you can read whether and how you qualify for this low-income benefit (LIV).
What is low-income benefit?
The LIV is part of the Wage Domain Allowances Act (Wtl, in Dutch only) and includes an annual allowance for employers who employ people with a low income. The aim of the scheme is to increase opportunities on the labour market for people with a (potentially) low wage. The government therefore wants to encourage employers to provide employment for this group of employees.
When to qualify for LIV?
Do you have or hire employees with low incomes and do you want to know whether you are entitled to the allowance for (future) staff? Then you have to check whether the employees in question meet the conditions:
- The employee receives wages from current employment: He or she is employed at the time you make the application;
- The employee is insured for at least one employee insurance policy (WAO, WW, WIA, Sickness Insurance Act);
- The employee had an average hourly wage between € 10.73 and € 13.43 in 2022 , or has an average hourly wage between € 12.04 and € 15.06 in 2023;
- The employee meets the hours standard of at least 1,248 hours paid per calendar year;
- The employee is younger than the state pension age (66 years and 10 months in 2023).
Hans owns a garage. Johan was employed by him throughout 2022 and worked an average of 32 hours per week (1664 hours per year). It thus meets the minimum hours criterion for low-income benefit.
Joris' salary was € 13.40 per hour. He was more than € 2.00 above the minimum, but still just low enough for LIV. Hans is therefore entitled to € 815.00 LIV as an employer. Did he not pay Joris 13.40 , but 13.45 per hour? Hans then just misses the LIV and he receives nothing. If Joris has worked overtime on top of the 32 contracted hours, it is important that these extra hours are also mentioned, the LIV may go up as a result.
Labour cost advantage
Does your employee meet the above criteria and is he/she also entitled to wage cost benefit (LKV) in addition to LIV? Then only the higher of the two allowances will be paid. In this article you can read what wage cost benefit is and whether your (employee) is eligible for it.
Height low-income benefit
The amount of the income benefit is calculated on the hours worked: the hours stated in the employee's contract and the paid additional work/overtime.
For 2023, the LIV looks like this:
Average hourly wage over 2023 € 12.04 to € 1.506
LIV per employee per hour paid € 0.49
maximum LIV per employee per year € 960
Brian owns an online pet store. In 2022, three employees worked here full-time. All three received the minimum wage of € 10.73 per hour. Brian is therefore entitled to the maximum LIV benefit per person: he receives 3 x € 960 = € 2,880.
UPDATE Temporary increase LIV
The LIV allowance per hour paid for 2022 will be increased once with retroactive effect over 2022 (paid in 2023) from € 0.49 to € 0.78 per hour paid per employee. The maximum compensation will be increased once with retroactive effect over 2022 (paid in 2023) from € 960 to € 1,520 per employee per calendar year. In the first version of the Payroll Tax Newsletter 2023 published by the Tax and Customs Administration, the increase in the LIV for 2023 (paid in 2024) is still mentioned. But the temporary increase is more limited than the previously planned expansion. The amount of LIV that will be paid out in 2024 over 2023 will be € 0.63 per hour paid once (was: € 0.49). The maximum amount will be € 1,242 (was: € 960) per employee per calendar year.
Claiming low-income benefit?
You don't have to apply for LIV yourself. If you are entitled to the compensation, this will automatically be charged on the basis of your wage declaration. Make sure that you fill in the number of hours paid correctly here, so you avoid missing out on the LIV unjustly. If you are entitled to the compensation, you will receive the allowance in the year following the year of the wage declaration.
Find out more
The UWV informs employers (in Dutch) about the Wage Domain Allowances Act (Wtl). If you hire staff with a distance to the labor market, you may be entitled to more benefits. With the Wtl you can qualify for benefits, like Wage cost advantage and the Youth Low Income Benefit.
If you need any help navigating through the Dutch legal and fiscal benefits you might be entitled to concerning your staff, let us know! We are happy to be of service.