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    Simplification of Labor Costs Tax Credit postponed

    The Dutch government would like to see more people with disabilities find work and remain employed. It has therefore prepared a legislative proposal to amend the ‘Participatiewet Uitvoeren Breed Offensief’ (Large Scale Participation of Disabled Persons Act) and a legislative proposal to simplify the ‘Wet banenafspraak en quotum arbeidsbeperkten’ (Job Agreement and Quota for Disabled Persons Act). Outgoing minister Koolmees of the Ministry of Social Affairs and Employment has notified the lower house of parliament that the planned date to have the amendments go into effect will not be made.


    Because the current cabinet of the Dutch government fell a few months ago, discussion of the legislative proposal to amend the ‘Participatiewet Uitvoeren Breed Offensief’ has been postponed from July 1, 2021 to January 1, 2022. Moreover, the planned date to implement the simplifications of the ‘Wet tegemoetkomingen loondomein’ (Financial Compensation for Wages Act) has also been changed to January 1, 2023. The simplifications will allow an employer to apply him-/herself for a ‘doelgroepverklaring’ (target group declaration) for an employee. In addition, the difference in the target group register between the target group for the Labor Costs Tax Credit – called ‘doelgroep LKV banenafspraak’ in Dutch – and the regular target group mentioned in the Job Agreement Act – called ‘doelgroep banenafspraak’ in Dutch – will disappear entirely. This means that organizations will no longer be entitled to receive a labor costs tax credit for individuals who did not finish basic education – so-called ‘scholingsbelemerden’ – who have not been included in the target group register. The same applies to individuals who receive a benefit or employment support on the basis of the ‘Wet Wajong’ (Work and Employment Support for Young Disabled Persons Act) and who do not possess a sustainable working capacity.


    The planned date for the implementation of the simplified version of the ‘Wet banenafspraak en quotum arbeidsbeperkten’ – January 1, 2022 – has also been postponed due to pressure felt by UWV (the National Institute for Employees’ Insurance and Regulations) and Belastingdienst (the Dutch revenue service) as a result of the coronavirus pandemic. The simplified version of the Act should make it possible to apply a granted Labor Costs Tax Credit structurally to an employee’s due payroll tax. Now, the tax credit can only be applied for a maximum of three years. Furthermore, the simplifications will make it no longer mandatory for employers to apply for a target group declaration for their employee(s) in order receive a Labor Costs Tax Credit. The legislative proposal has already been discussed online, but must still be officially submitted to the lower house of parliament for discussion.

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