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The work-related costs scheme (werkkostenregeling, WKR) enables you to spend part of your total taxable wage (the ‘discretionary scope’) on allowances, benefits in kind and provisions for your employees without tax liability.
How does the WKR scheme work?
If you make use of the work-related costs scheme, you do not have to pay wage tax on the amount within the so-called discretionary scope (vrije ruimte, in Dutch). But you must pay a final levy (eindheffing, in Dutch) over any amount above the discretionary scope. You do not have to pay or withhold health insurance premiums, and income-dependent employer's health care insurance contributions over this final levy amount.
If you want to find out more on how to calculate the discretionary scope and final levy you can consult chapter 10 Eindheffing werkkostenregeling berekenen of the Dutch-language Payroll Taxes Handbook (pdf).
What is the discretionay scope?
Employers are allowed to reward their employees up to a maximum percentage of the company's entire salary costs (the collective salary of all employees combined) without tax liability under the work-related costs scheme (WKR). This is called the discretionary scope (vrije ruimte). In 2022, the discretionary scope is:
- 1.7% over the first €400,000 of the wage costs (please note that in 2020 and 2021 this percentage was raised due to the corona crisis).
- 1.18% for the amount over €400,000.
Specific exemptions and zero valuations
Aside from the WKR you can reimburse certain expenses, provide benefits in kind or make provisions for your employees without tax liability. You can do this through specific exemptions (gerichte vrijstellingen) and zero valuations (nihilwaarderingen). Specific exemptions are for example reimbursements for costs incurred by working from home, travel allowances, reimbursements for meals and overnight stays for courses or congresses, and costs incurred to pay for a certificate of good conduct (VOG). Zero valuations are applicable solely to wages in kind, for example work clothing or refreshments at work. This is not debited from your discretionary scope.
The specific exemption for employee training (these are wages from current employment) will be extended in 2021 with an exemption for wages from previous employment (thus this applies to former employees as well). The employee takes this training or study to be able to earn an income.