If, for some time now, you feel inundated with information about the changes that occurred on 1 January 2006, you will now receive a brief overview about a few important ‘tax’ changes taking place at that time.

Basic health insurance 2006
For 2006, the health care contribution percentage for the income-related premium has been set at 6.5 % of gross employment income (box 1) up to and including the 2nd tax bracket. The employer is required to compensate this contribution to the employee. Exceptions to this regulation are only valid if they are included in a collective labour agreement or in a company’s terms of employment.
Please note!! The introduction of the basic health insurance act in 2006 does not imply any automatic termination of a compensation settlement for health-care costs that an employer was compensating to an employee up to and including 31-12-2005.

Definition of employment income
With few exceptions, a uniform definition of employment income (income subject to payroll tax and national  health insurance contribution) has been successfully formulated.

Moment of enjoyment
In declaring the employment income for a period, it is the moment of enjoyment of the “income” that is decisive. In the case of retroactive payments resulting from collective agreements or individual income increases, the moment of enjoyment occurs in the period in which it is deemed payable.  Throughout 2006, you can however process the payment in your bookkeeping and tax statements for the income period to which the retroactive payment pertains (e.g. as increases with retroactive effect). This requires the submission of a notice of revision in the immediately following declaration. No penalty will be assessed for the submission of this notice.
Please note!! The Tax and Customs Administration will certainly charge you interest because the correct payment was made too late.

Anonymous employees
If employees are not properly registered in the employee records (copy of passport, payroll-tax statement, Social security number), the employees will be regarded as anonymous. Beginning on 1 January 2006, there will no longer be any consideration given to the maximum Social security contribution income and exemption in calculating the employee health insurance contribution.

Private use of company car
As of 1 January 2006, the supplement for the private use of a company car (22 % of listed value) is to be included in the employment income subject to payroll tax and national health insurance contribution.
This regulation does not apply to employees whose private use of the company car involves less than 500 kilometres per year.

Payment of travel expenses
For 2006, the tax-free payment of travel expenses for commuting to work and business trips has been set at € 0.19 per kilometre.