Work-related costs scheme: staff allowances
Do you provide staff allowances to your employees? The work-related costs scheme (werkkostenregeling, WKR) allows you to spend part of your total taxable wage (the 'discretionary scope' or 'discretionary margin') without tax liability.
You can use this discretionary margin on:
- reimbursements: for example a reimbursement for a haircut
- benefits in kind: for example Christmas or birthday present
- provisions: for example a company bicycle
What are the conditions for the WKR scheme?
If you want to use the work-related costs scheme, you must keep to the conditions:
- If you do not exceed the maximum amount of the discretionary margin (vrije ruimte), you do not have to pay wage tax on the value of the allowance. The discretionary scope is reassessed every year.
- You pay a final levy (eindheffing) over any amount above the discretionary margin. You do not have to pay national insurance contributions, employee insurance contributions, and employer's health care insurance contributions over this final levy amount. You also do not have to withhold the healthcare insurance contribution.
You can learn more on how to calculate the discretionary margin and final levy in chapter 10 Vrije ruimte en eindheffing werkkostenregeling berekenen of the Dutch-language Payroll Taxes Handbook (pdf).
Specific exemptions and nil 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): such as reimbursements for costs incurred by working from home, travel allowances, or costs incurred to pay for a certificate of conduct (VOG).
- nil valuations (nihilwaarderingen): such as work clothing or refreshments at work
You can find more information on specific exemptions and zero valuations in chapter 22 Gerichte vrijstellingen, nihilwaarderingen en normbedragen of the Dutch-language Payroll Taxes Handbook (pdf).
How to use the WKR scheme
As an employer you must justify the WKR when you file your payroll tax returns (aangifte loonheffingen). Do you need to pay a final levy? Then you must justify the WKR in the second tax period of the following calendar year. If you do not surpass the discretionary scope, you do not need to file and pay the final levy.