Let companies share profit & equity with staff tax free to fight wage gap, says union
Allowing employers to give their employees 2,000 euros worth of shares tax-free per year will help close the wage cap between company directors and regular employees, according to trade union CNV. Shares let employees benefit directly from companies’ profits and also connect them more to their employers. A win-win, the trade union said, urging the government to arrange this fiscally.
“Company shares are an attractive form of additional remuneration for employees. You benefit directly from the high profits that companies are currently making. Necessary in times of high inflation and rapidly rising consumer prices,” said CNV chairman Piet Fortuin. “A good share package can bring an employee a lot of extra money.”
But as employees currently have to pay an annual tax on their shares - the Tax Authority sees shares as wages - buying company shares is an unattractive option, especially for low-income workers. The tax applies even if the shares don’t pay dividends. “You don’t get any money, but you pay taxes. As far as we are concerned, this must be tax-free, up to 2,000 euros per year. For everyone,” Fortuin said.
The union added that giving employees shares is also a good option for employers. It offers employees financial participation in the company. “This increases involvement and binds employees to your organization. Necessary in a time of labor market shortages,” Fortuin said. Invested employees are more productive and more innovative, he added.
According to the union, less than 10 percent of Dutch companies give employees shares. And at the Dutch companies that do have profit-sharing schemes, these mainly apply to boards of directors and higher management, not regular workers.
That puts the Netherlands well below the European average. In France, for example, over 80 percent of companies have a profit-sharing scheme. And Germany recently increased the tax-free portion of its companies’ profit-sharing schemes from 360 to 1,440 euros.
