Payroll tax Credit (Loonheffingskorting) and how does it apply if I have more than one job in the Netherlands

Payroll Tax Credit in the Netherlands (Loonheffingskorting)
A tax credit is a discount on income tax (Inkonstenbelasting) and social insurance contributions (Zorgverzekeringswet). If you work as an employee, your employer takes into account the general tax credit (algemene heffingskorting) and the employee tax credit (arbeidskorting) in your payroll. We call these discounts, payroll tax credit (Loonheffingskorting). In other words, you pay less payroll taxes and receive more salary.

How does the payroll tax credit work?

If you work as an employee, you are entitled to a discount on your taxes, but it should only be applied for 1 job during the year.

You can request this tax discount from your employer or in many cases your employer can also ask if you want to apply this tax discount.

The form that you must sign with your employer, to have this tax discount is called “Model opgaaf gegevens voor de loonheffingen” (Payroll tax return data model), however, if you have already signed it for 1 employer during the year , you should not sign it for a second employer since you would have to return the extra discount, which would not correspond to you, in the income tax return. It is advisable to only sign it with the employer that obtains the highest annual income.

What happens if you work for more than 1 employer at the same time or during the entire tax year?

You only need to claim the payroll tax credit for only 1 employer. If you claim a payroll tax credit with every employer you have during the year, you will have too much of a deduction on your taxes and will likely have to pay taxes back on the income tax return.

If you work for multiple employers consecutively in 1 year, then you can claim the payroll tax credit from any employer. But keep in mind to only apply for this payroll tax discount to only 1 employer per fiscal year. 

What happens when you work for an employment agency?

When you work for an employment agency, you may be sent to work for different companies. However, because you only work at the agency, you really only have one real employer.

So if you only apply the payroll tax discount to this employment agency, there would be no problems, since it would only apply to one job.

You can review the following link on other types of tax credits that exist: https://www.tax-in.com/en/taxcredit/

Payroll Tax Credit in the Netherlands (Loonheffingskorting)

Source : Belastingdienst