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Government information for entrepreneurs

Work-related costs scheme: staff allowances

This information is provided by

Netherlands Enterprise Agency, RVO

The work-related costs scheme (werkkostenregeling, WKR) is obligatory for all employers in the Netherlands. The scheme enables you to spend part of your total taxable wage (the ‘discretionary scope’) on allowances, benefits in kind and provisionsExternal link 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). Nor do you have to pay or withhold health insurance premiums, and income-dependent employer's health care insurance contributions over this amount. You do have to pay a final levyExternal link (eindheffing, in Dutch) of 80% over any amount you pay or pay in kind above the discretionary scope.

Specific exemptions

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, in Dutch) and zero valuations (nihilwaarderingen, in Dutch). This is not debited from your discretionary scope.

Prinsjesdag (Budget Day) 2019 announcement

Expansion of work-related costs scheme

On Prinsjesdag (Budget Day) 2019, the government announced an expansion of the work-related costs scheme. From 2020, you will be able to award your staff up to €2,000 extra in tax-free allowances. This is over and above the current tax-free allowance. This will also include compensation for personal perks, such as membership of a sports club or a Christmas bonus.

At present, employers are allowed to reward their employees up to a maximum of 1.2% 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. As of 1 January 2020, the discretionary scope will be:

  • 1.7% over the first €400,000 of the wage costs.
  • 1.2% for the amount over €400,000 (this percentage remains the same as the current percentage).
For example, in a company where the salary costs are €400,000, the tax allowance is currently €4,800, from 2020 it will be €6,800.

Relaxation of other rules

Certificate of good conduct

As of 1 January 2020, the costs incurred to pay for a certificate of good conduct (VOG) will be added to the list of specific exemptions. 'Specific exemptions' are reimbursements which are not deducted from the discretionary scope. This means the costs can be refunded tax-free with no impact on the discretionary scope.

Settlement later

If you reimburse or provide more than the amount covered by the discretionary scope, then you pay tax over this amount. At present settlement must take place in the first tax return period. As of 2020, you can settle this later than currently required: i.e. in the second tax return period of the next calendar year at the latest.

Discount on home brands

You can give your staff a 20% discount on products made by your company up to a maximum of €500 per year per employee. The Tax and Customs Administration will determine how much your company’s home brands are worth by using the standard sales and shop value including VAT.

These measures will come into effect on 1 January 2020, subject to their acceptance by the upper and lower houses of parliament.

This information is provided by

Netherlands Enterprise Agency, RVO