For whom is it?
A ‘loonkostenvoordeel’ (labor costs subsidy), abbreviated as LKV, is a financial compensation organizations are entitled to when they (re-)employ individuals belonging to a special target group, for example from the target group mentioned in the ‘banenafspraak’ (agreement on job provision) and/or individuals who have been hampered in their education (e.g. due to illness or impairment). Which subsidies are available and under which conditions?
Your organization is entitled to an LKV when employing an individual from the following groups:
- eligible for a benefit and 56 years of age or older;
- work disabled;
- employees belonging to the target group mentioned in the ‘banenafspraak’ and/or individuals who have been hampered in their education.
You are also entitled to a LKV when you find alternative work for a work disabled employee. For all these groups, the same conditions apply: (1) you will need a ‘doelgroepverklaring’ (a target group declaration, proving that an individual in question belongs to the target group) in order to receive the subsidy, (2) in the wage declaration you must check the ‘yes’ box at the relevant reference, and (3) you are not eligible to an LKV if you have previously received subsidy for the employee in question for the full term of three years.
In most instances, the required ‘doelgroepverklaring’ will be provided by the UWV (the Institute for Employees’ Insurances and Regulations); although in the case of individuals aged 56 or older and receiving a benefit from the municipality, the latter may also play a role. Without a ‘doelgroepverklaring’, the Dutch Revenue Service will treat any application for an LKV as incorrect. This could result in a financial penalty and additional taxation. Also make sure to frequently check whether the ‘doelgroepverklaring’ is still valid. It is for instance possible that in the meantime the employee in question has reached state pension age (‘AOW-leeftijd’ in Dutch), in which case the ‘doelgroepverklaring’ is no longer valid and your organization is thus no longer entitled to an LKV.
In order to receive an LKV for an employee belonging to the target group mentioned in the ‘banenafspraak’ and/or individuals who have been hampered in their education, the following conditions must be met:
- the employee in question has taken out one or more employee insurances;
- (s)he has not yet reached state pension age (AOW-leeftijd);
- (s)he has not been employed by the same organization six month prior to start of his/her current employment with that organization.
Start of employment
In addition to the conditions mentioned above, the employee must meet one of the following conditions one month prior to the start of his/her employment or on the first day of his employment:
- (s)he is entitled to a benefit or employment support on the basis of the ‘Wet Wajong’ (Work and Employment Support for Young Disabled Persons Act)
- (s)he falls under the ‘Wet sociale werkvoorziening’ (Social Employment Act)
- according to the UWV, (s)he is unable to earn 100% of the statutory minimum wages and will received assistance in finding work under the responsibility of the municipality. Or alternatively, the municipality deems the employee unable to earn 100% of the statutory minimum wages. In both cases, the employee must have started working for the organization in question on or after January 1, 2016, and at that moment it was determined (s)he was unable to earn 100% of minimum wages.
- (s)he is an ‘arbeidsbeperkte’ (an individual limited in his/her abilities to work). This group includes, among others, high school and special education dropouts as well as individuals who have dropped out of vocational education.
- (s)he has received a provision by the UWV or the municipality – such as a wheelchair or sign language interpreter – and is unable to work without this provision.
- (s)he does not belong to the target group mentioned in the ‘banenafspraak’, but as a result of illness or impairment the employee has experienced problems following education and is employed by your organization within five years after completing that education.
Amount of LKV
For employees from the target group mentioned in the ‘banenafspraak’ or who have been hampered in their education, the LKV per employee per paid hour is € 1.01, with a maximum of € 2,000 per calendar year. At the moment, the maximal term of the LKV subsidy is three years, but as of 2021 you are entitled to this subsidy for as long as the employee is employed by your organization.