Reduction Dutch AWf-premium for employers from August 2021
AWf-premium: general unemployment fund
Starting August 2021, the Dutch AWf- premium is reduced. Employers will be compensated because they will have to pay less payroll taxes to the general unemployment fund. (also known as WW-premium). The new premiums are more than 2% lower than before starting from August, 2021. The low rate goes from 27% to 0,34%. The high rate was 7,7% and is now 5,34%.
Alternative for the BIK*-arrangement
During Prinsjesdag 2020, parliament brought good news for employers: with the so-called BIK-arrangement, they would be compensated with a tax deduction of over 4 billion euro. However the arrangement turned out to be contested and the European Commission would most likely reject this as unsanctioned governmental support. Because of this the BIK-arrangement* was withdrawn. To give companies more space to invest, employers were given a discount on their payroll expenses as an alternative to the BIK-arrangement.
When does the reduction go into effect?
Are you an employer and do you declare your payroll taxes every four weeks? Then the premium reduction will start as of periode 9. The new percentage can then be applied as of Aug 16, 2021. When you do your payroll taxes every month, or every (half) year), then the reduction applies as of Aug 1, 2021. The premium percentage concerns the wages that the employee receives from that moment onwards. Are you paying a supplementary payment of the wage from before this date? Then the old percentage still applies. Read more here* how supplementary payments work
What AWf-premium rate?
The Tax Authorities differentiates the WW-premium in two categories; a low and a high AWf-premium. Depending on the labour agreement it is determined what rate is used. Generally, the wages of the employee with a fixed contract are charged with the low rate (as of August, 2021, 0,34%). For employees with a temporary contract, the high rate of 5,34% is charged as of August, 2021. As was previously the case, this arrangement has exceptions and additional conditions*. Make sure to check what rate applies to your situation when you are in doubt.
Would you like to know more?
Read more about the reduced AWf-premium on the Tax Authorities website*. You will also find more information about the premium differentiation in the WW*. Our sister company Salupa (payroll and wages) wrote about wage measures as a consequence of Corona and Brexit and gives insight, tips and information about wages, staff and healthy (financial) management.