The maximum temporary ‘RVU-drempelvrijstelling’ (the threshold amount for payments part of an Early Retirement Scheme which are exempt from a levy) has been increased from € 1,767 to € 1,847. The change applies retroactively to January 1, 2021.
The temporary threshold amount for an Early Retirement Scheme applies as of January 1, 2021 and is part of the governmental agreements on pensions. If a payment made in relation to an Early Retirement Scheme remains below a threshold amount, the employer does not have to pay a 52% levy on the payment as a penalty (the so-called ‘pseudo-eindheffing’ in Dutch). This threshold amount is at most equal to the net amount in monthly state pension received as of January 1 in the respective year by people who live alone. In 2021, this is € 1,847 per month, which amounts to € 66,492 in 36 months. This threshold amount is, however, the grossed-up version of net monthly state pension received by people who live alone. In other words, the state pension is not € 1,847 per month.
Early Retirement Scheme in the payroll tax return
The ‘Nieuwsbrief Loonheffingen 2021’ (Newsletter on Payroll Tax 2021) contains information on how to declare an Early Retirement Scheme in your payroll tax return. As of January 1, 2021, a new income code must be used for Early Retirement Schemes. The employer must declare payments made in relation to an Early Retirement Scheme under code 53. This code must also be used if the threshold amount does not apply (see conditions below). If payments are made in several instalments, the payroll tax tables (‘tijdvaktabel’ in Dutch) must be applied. For schemes set up in such a way that the employee in question is essentially removed from active duty, the white-colored table of the payroll tax tables must be used for a duration of 104 weeks. In any other instance, the green-colored table must be used. If it has been agreed upon that all payments in relation to an Early Retirement Scheme are made in a single instalment (i.e. the entire amount is paid at once), the green-colored table for special remunerations (‘groene tabel voor bijzondere beloningen’ in Dutch) applies.
Conditions for using the ‘RVU-drempelvrijstelling’
The following conditions must be met in order for a threshold amount to be applicable to an Early Retirement Scheme:
- Any payments made in relation to an Early Retirement Scheme start at most 36 months immediately prior to the employee in question reaching state pension age (‘AOW-leeftijd’ in Dutch). If payments start fewer than 36 months before the employee reaches that age, a threshold amount only applies to the remaining months.
- The employers calculates the applicable threshold amount per month.
- By December 31, 2025 at the latest, the employee in question will have reached an age which is (at most) 36 months before state pension age.
- The threshold amount is at most equal to the net amount in monthly state pension received as of January 1 in the respective year by people who live alone. This amount is what is left after deduction of payroll tax and national insurance premiums.
The ‘RVU-drempelvrijstelling’ is a temporary measure and is in effect from January 1, 2021 through December 31, 2025. The measure is one of various measures taken by government to make it possible for employees to go into an early retirement.