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Do Rhine boatmen’s payslips show that their employer has paid health insurance premiums? This does not mean that the free space deduction was calculated incorrectly.
Some Dutch employees receive a salary from an employer who is not a withholding agent for payroll tax. This may be the case, for example, if it is a foreign employer without a permanent establishment or payroll administration in the Netherlands. In this situation, certain allowances, benefits in kind and provisions are not considered as wages for Dutch income tax purposes. These allowances, benefits in kind and provisions must then be qualified as wages on which the employer applies a deduction in discharge. Also, due to the discretionary scope, the employer would not have to pay payroll tax on this last payroll deduction. Due to this legal provision, certain Dutch employees, for example certain Rhine sailors, are entitled to a tax deduction from their wages. This deduction is equal to the percentage corresponding to the free space. In 2011, free space accounted for 1.4% of salary.
No evidence of higher salary
In a number of cases, the district court of Zeeland-West-Brabant had to rule on a dispute between the tax and customs administration and certain Rhine boatmen. According to the Rhine sailors, the declared salary is important for the calculation of the deduction mentioned above. The inspector thinks otherwise. The payslips show that the employer has paid the health insurance premiums. The tax and customs authorities indicate that a recalculation of wages must take place in relation to this taxable employer payment. However, the court ruled that the tax authorities failed to make it plausible that the employees received more wages than the amount used in the tax assessment. After all, the mere fact that payslips show employer payments for health insurance premiums says nothing about the accuracy of the reported salary. There is no concrete indication that the employer did not determine this salary correctly. The attraction of Rhine sailors is therefore well founded.
Law: art. 3.84(2) Income Tax Act 2001 and art. 31a, second paragraph of the LB Act
Sources: District Court of Zeeland-West-Brabant 13 December 2022 (published 6 January 2023), ECLI:NL:RBZWB:2022:7550, BRE 19/1577, District Court of Zeeland-West-Brabant 13 December 2022 (published 6 January 2023), ECLI:NL:RBZWB:2022:7551, BRE 19/1578 and District Court of Zeeland-West-Brabant 13 December 2022 (published 6 January 2023), ECLI:NL:RBZWB:2022:7552, BRE 21/3231
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