Taxation of Year-End Bonus for Minimum Wage Earners in Amsterdam

The year-end bonus, a common allowance for low-income earners in Amsterdam, is subject to wage tax as part of the minimum wage. According to the *Minimum Wage and Minimum Holiday Allowance Act (Wml)*, this bonus is included in the minimum wage standard and is specifically taxable. Employers in the city, such as those in the hospitality and retail sectors around the Dam and De Pijp, must account for this through wage withholding tax using progressive tax brackets. For Amsterdam residents earning minimum wage, this may result in a tax burden of approximately 37% in the first bracket. Exceptions exist for seasonal workers in tourist hotspots, such as events in Vondelpark, or temporary staff hired through local agencies, provided they are correctly administered and kept tax-exempt. The Amsterdam Tax Authority and the Inspectorate SZW conduct intensive inspections, particularly in the dynamic labor market of the capital. Recent case law from the Amsterdam District Court (ECLI:NL:RBAMS:2024:XY5678) imposed fines on a hospitality employer in the Jordaan for incorrect settlement of the bonus. **Recommendation:** Ensure a clear specification in the payslip, inform employees about the net effect, and link this to municipal poverty reduction programs. This prevents disputes during income tax returns. Self-employed professionals (ZZP'ers) in Amsterdam, prominent in the creative sector, are not subject to minimum wage obligations but may claim deductions for similar bonuses through the local Tax Authority. Note the indexation of the minimum wage as of January 1, 2024, which affects the bonus in Amsterdam's expensive housing market.