How is the wage tax reduction processed in payroll?
You turn on the wage tax reduction with wage code 490. Add this code for the employee under Fixed wage codes & taxed fringe benefits.
The amount you enter depends on the country.
Curaçao, St. Maarten and BES
- Enter the reduction amount per pay period.
- Example: the reduction is XCG/USD 12,000 per year and you run a monthly payroll. Enter XCG/USD 1,000 under wage code 490.
- This only applies when Wage Tax is calculated with the Wage Tax tables and Extra Income Tax tables.
- It does not apply when Wage Tax is calculated with the annual income and the annual Income Tax table.
Aruba
In Aruba, it works a little differently.
- Take the total yearly amount from the wage tax reduction decision (in Dutch: Beschikking vermindering loon).
- Divide it by the number of pay periods in a year. For a monthly payroll, divide by 12.
- Enter the result under wage code 490.
Example: the yearly reduction is AWG 18,000.00 and you run a monthly payroll. Enter AWG 1,500.00 per month (18,000 ÷ 12).
- Always use this calculation, even if the reduction starts later in the year.
- Check your work: after a pay run, open report A23. Here you can see if the correct yearly amount is used.
Where can I see it on the payslip?
The reduction doesn’t appear in the gross-to-net part of the payslip. You’ll find it at the bottom, together with other tax items such as fiscal allowances.
New tax year
When you move to a new tax year, Celery sets wage code 490 back to zero. This is because the wage tax reduction must be applied for again every year.