Youth low income benefit (Jeugd-LIV)

Youth low income benefit (Jeugd-LIV)

The Wages and Allowances Act (Wtl) consists of 3 schemes for employers. The government aims to employ people or keep employees with a vulnerable position on the labour market with these schemes. The act consists of the labour cost benefit (LKV), the low income benefit (LIV) and the youth low income benefit(Jeugd-LIV). The LIV commenced on the 1st of January 2017. Both LKV and the Jeugd-LIV commenced on the 1st of January 2018. This article focuses on the conditions, amount and process of Jeugd-LIV.

As aforementioned, the Jeugd-LIV is a regulation that started on 1 January 2018. It is a compensation for employers as a result of the increase of the minimum youth wage of employees aged 18 to 21, which was implemented on the 1st of July 2017. Employees of 22 years and older are entitled to the minimum wage. They do not fall under the Jeugd-LIV but under the regular LIV. The entitlement to and the level of the Jeugd- LIV is determined in the year after the calendar year for which the Jeugd- LIV is calculated.

Conditions for Jeugd-LIV
A company is entitled to the Jeugd-LIV if its employee is aged between 18 and 21 years. Furthermore, the employer should also meet the following 3 conditions:

  • The employee is insured with 1 or more employee insurance policies.
  • The employee has an hourly wage that is not lower than the legal minimum youth wage for his or her age.
  • The employee is 18, 19, 20 or 21 years old on 31 December 2017.

Amount of Jeugd-LIV
If the company is entitled to the Jeugd-LIV, it will receive an amount for each paid hour with a maximum of € 3,286.40 per year per employee. The exact amount of the compensation depends on the number of hours paid and the age of the employee. The increase in the minimum youth wage was introduced on the 1st of July 2017. As a result, the jeugd-LIV compensation for 2018 is multiplied by 1.5. This means that the increase in the minimum youth wages as of July 1, 2017 will be compensated in 2018.

The age of the employee on December 31, 2017, determines the amount the company will receive in 2018 per paid hour. According to the table made by the Tax Authorities, in a situation where an employee is 19 years old on the 31st of December 2017, the company will receive € 0.28 per paid hour over the year 2018. However, if the employee turns 19 on January 1 2018, the company will receive € 0.23 per paid hour in 2018. This is because the employee was still 18 on 31 December 2017.

Age on
31 december 2017
Jeugd-LIV per employee per paid hour Maximum Jeugd-LIV per employee per year
18 € 0,23 € 478,40
19 € 0,28 € 582,40
20 € 1,02 € 2.121,60
21 € 1,58 € 3.286,40

Process of receiving Jeugd-LIV
Companies do not have to apply for the Jeugd-LIV themselves. The Tax Authorities uses the wage tax return to calculate for which employee the company is entitled to receive the Jeugd-LIV. Therefore it is important that the company register the correct number of working hours. What happens if the data is not correct on the wage tax return? The company might receive partial or no Jeugd-LIV at all. If the company is entitled to receive the Jeugd-LIV, the company will receive a provisional calculation in 2019. It will be calculated based on the wage tax return of 2018. It is advisable to always check this calculation carefully.

The company will receive a definitive calculation from the Tax Authorities by 31 July 2019 at the latest. The Jeugd- LIV will be paid to the company by the Tax Authorities within 6 weeks after the date of the final calculation.

If you would like to receive more information concerning the payroll changes in 2018, do not hesitate to contact us.

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