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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 scheme work?
You do not have to pay wage tax on the amount within the discretionary scope (vrije ruimte, in Dutch). You do have to pay a final levy (eindheffing, in Dutch) of 80% over any amount you pay or pay in kind 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 amount.
If you want to find out more on how to calculate the discretionary scope and final levy you can consult chapter 10 of the Dutch-language Payroll Taxes Handbook (pdf).
Employers are allowed to reward their employees up to a maximum percentage of the company's entire salary costs (i.e. the collective salary of all employees combined) without tax liability under the work-related costs scheme (WKR). This is called the discretionary scope. From 1 January 2021, the discretionary scope is:
- 3% over the first €400,000 of the wage costs (please note that this percentage was raised due to the corona crisis and will be lowered back to 1.7% from 1 January 2022).
- 1.18% for the amount over €400,000.
For example, in a company where the salary costs are €400,000, the tax allowance is €12,000.
Specific exemptions and zero valuations
You can reimburse certain expenses, provide benefits in kind or make provisions for your employees without tax liability. This includes travel costs, telephones or computers. You can do this through specific exemptions (gerichte vrijstellingen) and zero valuations (nihilwaarderingen). Specific exemptions are for example travel allowances, 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.