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Doing business in the Netherlands 31ances, overtime, commissions and payments for athirteenth month. Employees can however alsoreceive remuneration ‘in kind’, such as products fromthe company or holiday trips. The concept ofremuneration also includes various other claims,compensations and provisions.A claim is a right to receive a benefit or provisionafter a period of time or subject to certain predeterminedconditions. One example of the latter is theright to receive retirement benefits. Examples ofprovisions include tools, meals, public transporttickets, etc. ‘Compensation’ normally refers toamounts that the employer pays its employees tocover costs incurred by the employee in thefulfilment of his or her job.Tax rateThe wage tax rates in 2014 are:• On the first € 19,645 of taxable income:a percentage of 36.25% is withheld (5.1% wagetax and 31.15% social security premium);• On the next € 13,718 of taxable income:a percentage of 42% is withheld (10.85% wagetax and 31.15% social security premium);• On the next € 23,168 of taxable income:42% is withheld;• On all additional income: a percentage of52% is withheld.When withholding the wage tax, the employer mustalso take into account the general tax allowanceand the labour allowance. The latter discounts arediscussed above.The employer himself, rather than the employee isliable for certain taxable components of the wage.This concerns the so-called final levy components.Certain forms of compensations ‘in kind’ are eligiblefor final levy payment, such as traffic fines notcharged to the employee and benefits with an economicvalue of a maximum of € 272 on an annualbasis and a maximum of € 136 per benefit (for examplea gift voucher or a bottle of wine). An importantexample of a compulsory final levy component is aredundancy payment for an older employee whichactually qualifies as an early retirement payment.Pseudo final levy on high salariesIn 2013 as a temporary crisis levy the pseudo-levyon high salaries was introduced. Initially it wasonly intended to apply for 2013. The levy has beenextended by one year and also applies for 2014.This final levy (for account of the employer) is 16%and is calculated on the annual salary, where thissalary for the employee is more than € 150,000.Work expenses schemeSince 1 January 2011 a new wage tax scheme hasapplied for compensations and provisions to employees:the work expenses scheme. Through thisscheme an employer may spend in 2014 a maximumof 1.5% (2013: 1.5%) of the total wage for tax purposes(the ‘free scope’) on untaxed compensationsand provisions for employees. In addition certainthings can continue to be paid or given untaxed.These are expenses for which the business characterprevails (specific exemptions). There are alsoexpenses that fall under the scheme, but for whicha zero valuation applies.On the amount above the free scope the employerpays wage tax in the form of a final levy of 80%. Thework expenses scheme has replaced the old rulesfor free compensations and provisions. Employersare not yet obliged to use the work expensesscheme. Up until 2014 it is possible to choose eachyear either the work expenses scheme or the oldrules for free compensations and provisions. From2015 the work expenses scheme will apply for allemployers. For employers not yet choosing thework expenses scheme the following old rules fortax-free compensations and provisions apply.Tax-free compensations and provisionsNot all compensations and provisions are taxablecomponents of the wage. Compensations are taxfreein as far as they are deemed to be issued tocut costs, liabilities and depreciations with respectto the proper fulfilment of the employment contract.Compensations paid by the employer to theemployee, and which are not generally perceivedby society as remuneration and which society considersthe reasonable duty of the employer to payor provide, are also included in the latter category.A ‘free’ compensation is always paid out in the formof cash, while a ‘free’ provision could also be providedin the form of goods and services. The conceptsare considered equivalent to the greatest extentpossible. If something can be provided untaxed,