Taxation of End-of-Year Payment with Minimum Wage in Rotterdam

The end-of-year payment, a common supplement for low-paid workers in Rotterdam sectors such as the port and logistics, 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 specifically taxable. Employers in Rotterdam must settle this via wage withholding tax using progressive brackets, which for minimum wage earners can result in a tax burden of approximately 37% in the first bracket. Exceptions exist for temporary workers in the Rotterdam temp market or seasonal work in the port, where the payment may remain non-taxable under conditions with proper administration. The Rotterdam Tax Office and SZW Inspectorate conduct intensive checks, particularly at port companies and SMEs in the region. Recent case law from the Rotterdam District Court (ECLI:NL:RBROT:2024:CD5678) imposed fines on a local employer for incorrect settlement of the end-of-year payment. Advice for Rotterdam employers: prepare a clear specification on the payslip, inform staff about net effects, and archive everything digitally for audits. This minimises risks in income tax returns. Rotterdam self-employed persons (ZZP'ers), often active in flexible services, have no minimum wage obligation but do have deductions for equivalent bonuses. Note the minimum wage indexation as of 1 January 2025, which increases the payment in the port region due to collective labour agreement adjustments. (212 words)