Taxation of Year-End Payment with Minimum Wage in Delft

The year-end payment, a common supplement for low-wage earners in Delft, falls under wage tax as part of the minimum wage. According to the Minimum Wage and Minimum Holiday Allowance Act (Wml), this payment is included in the minimum wage standard and is specifically taxable. Employers in Delft, such as in the local hospitality and technical sectors around TU Delft, must settle this via payroll tax using progressive brackets. For minimum wage earners, this can result in a tax burden of approximately 37% in the first bracket. Exceptions exist for seasonal workers in the Delft tourism sector or agency personnel on university projects, where the payment may remain non-taxable with proper administration. The Tax Authorities and SZW Inspectorate conduct strict controls in the South Holland region, particularly on small businesses in the city centre. Recent case law from the District Court of The Hague (ECLI:NL:RBDHA:2024:CD5678) imposed fines on a Delft employer for incorrect settlement of the year-end payment. Advice: prepare a clear specification on the payslip and inform employees about the net effect, taking into account Delft collective labour agreements in the metal and construction sectors. This prevents disputes during income tax returns. Self-employed persons (ZZP'ers) in Delft have no minimum wage obligation, but do have deductions for similar bonuses via local entrepreneur schemes. Note the minimum wage indexation as of 1 January 2024, which increases the payment in Delft businesses. (212 words)