UWV benefit via employer? Take note: rules will change from 2027

What is the issue? 

In certain situations, the employer receives a benefit from the UWV on behalf of the employee and then pays it to the employee together with their salary. Up to and including 2026, salary and benefit can still be treated as a single component for payroll tax purposes. This allows the employee to make optimal use of the applicable tax credits. From 2027 onwards, this will no longer be possible.

Why is this changing? 

The change follows a decision by the Dutch Supreme Court of 15 November 2024. The Court ruled that the current system results in unequal treatment: employees who receive their benefits directly from the UWV are taxed differently from employees whose benefits are paid via their employer. This is considered to be in breach of the principle of equality.

What will change in practice? 

As of 1 January 2027: 

• it will no longer be relevant for payroll tax purposes whether the benefit is paid via the UWV or via the employer;
• salary and benefits must be processed separately in the payroll administration;
• the employementtax credit (arbeidskorting) will apply only to employment income and no longer to benefits.

Impact for employees 

From 2027 onwards, employees in comparable situations will be treated equally for tax purposes. This eliminates differences in net income that arise solely from the method of payment. 

However, for employees who receive both salary and a benefit paid via the employer, this change may result in a decrease in net income of several hundred euros per month as of 1 January 2027.

What can you do as an employer? 

It is advisable to take action in a timely manner: 

• Identify which employees this arrangement applies to;
• Inform them about the upcoming changes effective 1 January 2027;
• Where necessary, prepare illustrative calculations to provide insight into the potential financial impact for the employee, and explain that the change results from amended legislation and regulations.

Now that the tax treatment will be aligned from 2027 onwards, it may also be worth considering having the UWV pay the benefit directly to the employee from that point forward.