Wage cost benefit

Are you an employer in The Netherlands and do you hire employees with an occupational disability? Or do you opt for older employees? Then you may be able to make use of the wage cost benefits scheme (LKV).

What is wage cost benefit?

As of 1 January 2018, the LKV entered into force as a follow-up to the premium discounts previously available for employees with a distance to the labour market. The LKV is part of the Wage Domain Allowances Act and includes an allowance for employers who, for example, hire people with benefits or disabilities. For example, the government wants to motivate employers to hire people who sometimes find it difficult to find work. The right to a wage cost benefit lasts a maximum of three years per employee.

Are you eligible for a wage cost benefit?

Do you want to know whether you are eligible for an allowance for (future) staff? Then you can use this rule help to find out if that is the case. By providing information about the (possible) employee in a few simple steps, an estimate is generated of the possible LKV. You can then download this in a financial CV. It is immediately checked whether you may be entitled to additional schemes.

How high is the wage cost benefit?

The amount of the wage cost benefit depends on various factors and can amount (see table) to € 6,000 per year.

Wage cost benefit is deducted from the employee's hourly wage. With this calculation example you get an indication of the compensation:

Calculation example 2022
In the fictitious situation of:

1. Hiring an employee who is 40 years old,

2. that comes from a wao benefit

3. who works 16 hours a week and

4. earns more than €13,43 per hour,

you are entitled to a wage cost benefit of € 3.05 per hour. The condition is that the employee was not employed by your organization in the past six months.

The UWV calculates the wage cost benefit and the tax authorities pay out after the end of the calendar year.

How do you apply for LKV?

You can apply for a wage cost benefit in your payroll tax return. But please note: before you do this, you must have a copy of the target group statement of the employee in question. This declaration can be requested by the employee or an authorised representative from the UWV or the municipality. Check here where you can go for your employee. Arrange this, in order to be allowed to use the scheme, within three months after the employee has started working.

Find out more

In this knowledge document you will find more detailed information (in Dutch) about the wage cost benefit. If you hire staff with a distance to the labor market, you may be entitled to more benefits. You may be eligible for a job coach, a trial placement of two months, a low income benefit (called LIV, if at least 1248 hours are included in the wage declaration per calendar year) or youth LIV (a contribution to the minimum youth wage). If you need any help navigating through the Dutch legal and fiscal benefits you might be entitled to concerning your staff, let us know! We are happy to be of service.