Insurance Premiums Exemption for BES Island Directors
Most times as individuals and businesses, we’re going to be paying tax to the Belastingdienst. We’re all familiar with the saying that death and tax are the two certainties of life! However there are occasions where we may have overpaid the Belastingdienst and are due a refund. In this post I highlight one of those cases that is applicable to directors/shareholders of companies operating in the BES Islands.
Insurance Premiums Exemption
According to the BES tax laws, directors/shareholders working for BES companies (i.e. NVs, BVs) should not pay employee or medical insurance premiums over their gross salaries. The employee or medical insurance insurance premiums should only be calculated on the gross salary of regular employees working for BES companies but not the director/shareholders of these companies.
Between 2011 to 2018, these premiums combined were calculated as 18.4% of gross salaries. Then between 2019 to 2022 the percentage dropped to 13.4%. As of 2024 the rate has been further dropped to 11.9%.
Are the Exemptions Applied?
If you’re working as the director/shareholder of a BES company (NV or BV), it is worthwhile to ensure that the exemptions have been applied and that insurance premiums are not being calculated on your gross salary. An initial way to check this is to review your payslip to see if the premiums are being applied to your salary. Depending on the payroll program your company uses, you may see line items on your payslip with descriptions such as;
“Employee insurance employer contribution”, “Medical insurance employer contribution”, “Addition Illness-Accident-Cessentia” and “Addition Health Insurance”.
As a director/shareholder, if you see the above descriptions on your payslip it’s possible that insurance premiums are being mistakenly calculated and paid on your gross salary. However, please don’t panic! Always ask an accountant or a tax advisor for clarity on the matter.
What if my Company Overpaid?
You’ve discovered that your company has mistakenly been calculating and paying insurance premiums on your director/shareholder salary! What can you do about this? I would advise that you report this to your trusted accountant or tax advisor. They can help you calculate how much insurance premium has been mistakenly paid to the Belastingdienst and help you apply for a refund. At Tact we have helped several BES companies successfully apply for refund of insurance premiums overpaid to the Belastingdienst.
