The first payroll of 2025 is just around the corner, all the changes for January are processed and the first audits have started. But what does the first payroll of 2025 look like and what should we consider this year? Let me help you get started. 

What is payroll? 

Perhaps you know exactly what this means, but if not, no problem. My colleague Jeroen asked me to write as structured and informative as possible, so start from the beginning and here it comes (Jeroen): payroll is the process by which employees receive their salary for the work done. This is not only the payment of the agreed wage, but also the tracking and processing of premiums, taxes, and any bonuses. It is a crucial process that ensures that salaries are paid accurately and on time and are compliant with the latest laws and regulations.  

Legislation in 2025 

Well, time to take you through the preparations for the first payroll of 2025. The mutations have been processed, and the checking of results and payslips has begun. What should you pay attention to? 

Minimum wage goes up 2.75% 

The minimum hourly wage (for age 21 or older) will be €14.06. 

Adjustment of WW premium rules for additional work on permanent contracts
From Jan. 1, 2025, the cost of overtime in the WW (unemployment) premium is reduced for employees with larger permanent contracts. This promotes internal flexibility for companies and lowers charges.   

Currently, there is a low WW premium for permanent contracts and a high premium for flexible contracts. Employers are allowed to let employees work up to 30% extra on top of their fixed contract hours without the high rate applying. If that limit is exceeded, the high rate applies retroactively for the entire year. Thus, a point of interest.  

There is an exception to this rule for contracts averaging 35 hours or more per week. Starting in 2025, this limit will be lowered to contracts of more than 30 hours per week. This offers companies more flexibility, while employees retain the security of their contract. 

PAWW contribution 

The rate for the PAWW will be adjusted from 0.08% to 0.1% in 2025. The PAWW is short for Private Supplementation WW and WGA and can be thought of as insurance against long-term unemployment. 

Abolition of the low-income benefit (LIV)
The regular low-income benefit (LIV) was abolished January 1, 2025. Youth LIV disappeared earlier. However, the 2024 concession will still be paid in 2025. 

Percentages of free space for WKR 

A percentage of 2% (2024: 1.92%) will apply for the first €400,000 of the wage bill as of January. The percentage free space for WKR (working expenses scheme) above the fiscal wage bill of €400,000 remains 1.18%. 

Lots of changes around transportation 

Final tax for company van 

The final tax for continuous alternate use can vans has been increased to €438. This amount will subsequently be indexed annually. 

Additional charges for electric cars 

The reduced addition rate for electric cars applies up to a list price of €30,000. This percentage will increase from 16% to 17% in 2025. For the portion of the list price above €30,000, the addition rate remains at 22%. 

Public transportation exemption 

Since 2024, public transport season tickets provided by employers have been tax-free, including for private use, provided they are used for business purposes too. The 2025 Tax Plan proposes to extend this exemption to international public transportation. 

Increased untaxed travel and work from home allowance 

The targeted exemption for untaxed mileage compensation remains €0.23. The targeted exemption for untaxed work from home allowance will be increased to € 2.40. 

Wage return 

As of 2025, there may not be a negative (total) amount of withheld income tax/ national insurance contributions or credits for the earned income tax credit in the calendar year for each income relationship (IKV). The cumulative amount must be set at €0 in the relevant return period. 

Compliance in 2025 

To best prepare yourself and your organization for these regulatory and process changes, there are 3 steps you can take: 

1. Maintain your Payroll Software. Make sure your payroll software is updated and compliant with the latest laws and regulations. Most payroll systems offer (automatic) updates that correspond to the changes from the government. My advice: contact the vendor to ask what you need to do yourself.
    
2. Train your payroll and HR staff. Offer training opportunities and/or resources to your HR and payroll colleagues. This will help them understand the changes, apply these accurately, and when answering employee questions. My advice: opt for a one-day course for the entire team! That way, everyone receives the same information, and you spend more time together as a team (which can be a bit trickier in these times of hybrid working). 
3. Transform on time. Start in time to optimize, automate, and therefore transform your payroll processes. A complete transformation mapping, outlining, testing, adjusting, implementing, and with good aftercare to head to the first payroll of the year. My advice: take the space and time mid-year to examine whether your payroll processes are still up to date. Are they still fully integrated into your HR processes or is there work to be done? Can you easily implement changing legislation, or will it turn your team and work process upside down? There is only one way to find out. 

Contact about payroll 

2025 has begun for me too, January 1 seems like a long time ago and wonderful go-lives have started! Want to get in touch about your payroll in 2025 and beyond? Plenty of opportunities for that! Would you like to join us as a payroll consultant and become my colleague? That is also possible, as there is a vacancy in our team.  

Good luck with the (final) checks and on to the first successful payroll of 2025! 

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