… of course, you do need to ensure that you meet the specified conditions. It’s certainly worth checking this (or having it checked) and, if necessary, making adjustments in the final months of the year.
LIV
LIV stands for Low-Income Benefit. In our article Low-income benefit (LIV) We explained how the scheme works to you earlier this year.
The Tax and Customs Administration has announced the final figures for 2017 in the first Payroll Tax Newsletter for 2018. You will receive the high LIV rate (€1.01 per hour worked) for employees who, in 2017, earned at least € 9,66 and up to € 10,63 have earned. For employees who, in 2017, earned between € 10,63 and € 12,08 If you have earned less than this amount per hour, you will receive the lower amount (€0.51 per hour worked).
You are only entitled to the low-income allowance for employees for whom, during the calendar year, 1,248 hours or more have rewarded.
Calculate and make adjustments if necessary
The LIV will be paid out automatically in 2018. The UWV will use your payslips to work out the amount to which you are entitled. This concerns the average hourly wage of an employee. This is calculated by dividing the total annual contributionable earnings (including holiday pay, allowances and the like) by the number of days in the calendar year paid hours.
A pay rise during the course of the year affects the average hourly wage and can completely wipe out the low-income benefit. The same applies to any (overtime) allowance, bonus or other supplementary payment. Working more or fewer hours affects the average hourly wage and therefore the LIV to be received.
You can still make adjustments until the end of the year. After that, the wages received and the hours worked will be finalised in your payroll records.
Adjustments can be made by having an employee work slightly more or slightly fewer hours. Could a pay rise perhaps be postponed until after the turn of the year? An employee who earns a bonus before the turn of the year may be able to receive it via the work-related expenses allowance without losing their LIV entitlement.
36-hour working week
The hourly wage thresholds for the LIV are based on a 40-hour working week. For an employee earning the minimum wage in a 36-hour working week, you will therefore never receive the higher LIV amount. This is because the maximum hourly wage for this (€10.63) is 110% of the minimum wage. A simple calculation shows that a minimum-wage earner working a 36-hour working week, when converted to a 40-hour working week, earns 111% of the minimum wage: (40/36)* 100% = 111%.