August: Country Payroll & Employment Law Updates

Erez Greenberg August 05, 2019

 

China

Maximum employer contribution rates for social security have been reduced (effective as of May 1st, 2019).

  • Across many regions in China, the maximum pension contribution for employers has reduced from a ceiling of 20% to 16%. This reduction of payroll tax is an effort to lower the burden that high taxes have imposed on medium and small businesses. It is also likely that more tax cuts will be implemented soon for businesses.

It is important to note that some regions in China already have contribution rates of 16% or lower.

  • Covered wage base changes:

Social insurance contributions and benefits calculation policies have changed from the previous year’s average monthly local earnings of public-sector workers (higher amount) to the previous year’s average monthly local earnings of full-time workers in both the public and private sectors (lower amount).  The change is meant to decrease the contributions and benefits paid under social security contributions due to the lower earning floors and ceilings.

These changes are meant to stabilize employment and economic growth while China continues its efforts to create a unified pension system by 2021.

Spain

Effective as of May 13th, 2019, Spain has made it mandatory that every company with operations in Spain will need to track employee’s attendance by requiring them to sign in and out of work. This is to be done regardless if the employees are paid hourly or salaried. The Spanish government has passed this law to help ensure that working regulations are met, fraud and labor abuse is reduced, and to help employees receive proper overtime pay.

Employees who are exempt from this include:

  • Senior management staff
  • Part-time workers who already track their hours
  • Workers with special or variable work hours
  • Workers who are excluded from the ET (Estatuo de los Trabajadores – workers statute law)

Hours tracked must be kept by the company for a period of 4 years with records available to the employees, government auditors, and unions.

Netherlands

A new Dutch law has passed (effective as of July 2nd,2019) that slows the rate of scheduled increases in retirement age for public pension from the previous 2012 amendment.

YearRetirement age
Previous     New
2019      66 and 4 months     66 and 4 months
2020      66 and 8 months     66 and 4 months
2021      67     66 and 4 months
2022     67 and 3 months     66 and 7 months
2023     67 and 3 months     66 and 10 months
2024     67 and 3 months     67

Poland

Poland has passed a new law (effective August 1st, 2019) that will make employees under the age of 26 exempt from income tax. This law will remove income tax from about 2 million young workers with the purpose of incentivizing them to stay and work in Poland. Since joining the EU, Poland has seen an exodus of skilled workers, many leaving to work in other EU countries for better job opportunities.

Tax rule:

  • Employees with gross annual earnings under 85,528 Polish Zlotys (€20,072) will be exempt from the 18% income tax.
  • Employees with income over under 85,528 Polish Zlotys (€20,072) will pay normal tax rate regardless of age.
  • Business owners under the age of 26 will not benefit form the tax exemption.

For employees to claim their tax exemption, they should submit a statement to their employers that their salary won’t exceed 85,528 Polish Zlotys (€20,072). Once the employer receives the statement they can cease the income tax deductions. Eligible employees can also wait till the end of the year and receive an income tax refund after they complete and submit their 2020 tax returns.


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