If a child cooperates in the parent(s)' business, there may be a real or fictitious employment relationship. A real employment relationship exists if the child works under the same conditions of employment as other employees. In that case, the normal payroll tax rules apply. For fictitious employment, you may apply a simplified scheme under certain conditions. What is the situation?
Fictitious employment
Fictitious employment exists if the child is at least 15 years old and the family relationship between parent and child predominates. The conditions of employment are then not the same as for other employees. This is because there is then no employer authority. The following applies to the fictitious employment for the assisting child:
- The parents are liable to withhold the wage tax/premium national insurance (loonheffing) and the employer's healthcare insurance act (Zvw).
- Parents must fulfil all administrative obligations, such as keeping a copy of the identity document with the records.
- The assisting child is not insured for employee insurance
Simplified scheme
For cooperating children in fictitious employment, you may apply a simplified scheme for withholding payroll tax and healthcare insurance under certain conditions. This scheme entails the following:
- You file payroll tax returns once a year.
- You use a separate payroll tax number.
- You apply for the payroll tax number using the form 'Notification of Payroll Taxes Employer of Cooperating Children'.
- You do not need to fill in any payroll records.
- You must keep the wage slip with the payroll records.
- You always apply the wage tax credit.
- You deduct payroll tax once a year on the 1st working day of the following calendar year. Then you also pay the Zvw.
- You file digital returns 1 month after the end of the calendar year. This means you must file the 2025 return by 31 January 2026.
Time of withholding
For cooperating children, you only have to calculate and remit payroll taxes once a year. The notional time of deduction is the 1st working day of the following calendar year. The situation (such as the age of the child) on that date is therefore decisive for the calculation of payroll taxes. However, you must use the previous year's rates.
If you do not withhold wage tax/ national insurance contributions from the wages of the assisting child, the unwithheld wage tax is a benefit that you must add to the child's wages.
Conditions of simplified scheme
You may apply the simplified scheme for cooperating children under the following conditions:
- The parent(s) have a sole proprietorship, partnership, vof or cv.
- Before the 1st payment of wages, record the name, address and citizen service number of the assisting child.
- The child works in the company of the parent(s). In the case of a partnership, vof or cv, it is therefore a child of 1 of the partners or associates.
- The child belongs to the household of this parent(s).
- The child is at least 15 years old.
- The child is not insured for employee insurance.
- The child does not enjoy any profit from the business.
Applying wage tax credit
You must always apply the wage tax credit when using the simplified scheme. Does the child have another employment or benefit at the same time where it has the wage tax credit applied? If so, you do not meet all the conditions and may not use the simplified scheme.
Permission from tax authorities
If you want to apply the simplified scheme, you must request permission from the Inland Revenue. If you have not requested such permission or if all conditions are not met, all normal administrative obligations apply.
Valuation of lodging, meals and clothing
Special rules apply to the valuation of accommodation, meals and clothing that cooperating children receive from their parents. You count the invoice value or fair market value of these benefits in kind as wages if:
- You have taken into account the free accommodation, free meals and free clothing when determining the salary.
- You have not taken these free benefits in kind into account when setting the salary and have agreed with the child that the salary is at least 30% lower than usual for the work the child does.
For lodging and meals, you may also use the following standard amounts in both situations:
- €6.80 per day per child for the value of free accommodation
- €3.95 per meal
If you determine the value of the benefits in kind using the standard amounts and then arrive at a wage that is at least 30% lower than the usual wage, then set the wage at 70% of the usual wage.
Own contribution
Does the child pay a personal contribution for benefits in kind from net wages? For example, boarding fees, housing fees and/or clothing fees? Then you may deduct this from the valuation amounts. The amount of the valuation may not fall below €0.
Pocket money
Does the child receive pocket money? Then you must include it in wages to the extent that it is more than what the child would receive if he or she did not cooperate in the business.
Example
You have set the wages of the collaborating child at €900. In addition, you provide the collaborating child with 30 meals with an invoice value of €10 per meal. Another employee receives €1,700 for the same work. If you use the standard amount (30 x €3.95 = €118.50) for the 30 meals you provide, you arrive at a wage of €1,018.50 for the cooperating child. As this is more than 30% lower than the usual wage, you set the wage of the cooperating child at 70% of the usual wage and thus €1,190.
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