Lower wages, higher income. One way for employees to earn money is by agreeing with their employer that the latter will cover certain expenses.
An employee lives at a distance of 20 miles from their work. In that case, the employer is allowed to compensate free of tax for an amount of € 228.-. As all employers try to avoid expenses, they usually reduce the amount of € 228.00 from the employee’s wages. If the employee pays an average tax of 40%, this will save them € 91.20 per month or € 1094.00 per year. This may even benefit the employer if the employee earns less than the social insurances maximum.
You can find a more detailed description of this in the following publication (only available in Dutch: Dubbel
Verdiend, on request availabel at PnA.
Because the communication on compensation schemes is often poor, both employers and employees tend to forget about these possibilities.
In recognition of services rendered, employees often receive from their employers an incomprehensible pay slip. That is a pity, as it prevents the employee from seeing the many things their employer has to contribute towards. It is important to communicate about compensation.
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