WORK-RELATED EXPENSES SCHEME

Overview of Work-Related Expenses (WKR)

The fundamental principle of the WKR is that everything you provide, reimburse, or make available to your employees is considered taxable wages. However, there are exceptions. Exempt entitlements such as pension entitlements and exempt payments (e.g., upon death) do not qualify as taxable wages. The same applies to intermediary expenses, like an employee initially paying for fuel for a company car.
 

Discretionary Allowance ("Vrije Ruimte")

Under the WKR, you may spend tax-free on unspecified reimbursements and allowances for your employees, using a budget of 2% of the first €400,000 of total taxable wages and 1.18% of the amount exceeding this threshold for 2025 and 2026. If you exceed this allowance, you must pay wage tax in the form of a final levy of 80%. This levy is borne by you, the employer, and not by your employees.
 

Targeted Exemptions and Optional Designation

Certain reimbursements, provisions, and allowances qualify as taxable wages but can still be provided tax-free without reducing your discretionary allowance. These include public transport expenses, mileage reimbursements (€0.23 per kilometre), and necessary work items. Explicit designation is unnecessary for targeted exemptions, such as reimbursement for education related to the employee’s occupation.
 

Customariness Test

Reimbursements must be customary, with amounts up to €2,400 per employee per year always considered customary. The test applies strictly to the discretionary allowance and final levy.
 

Nil Valuation for Workplace Facilities

A nil valuation applies to facilities used at the workplace, such as work clothing and refreshments. A workspace at home generally does not qualify, except for a clearly separate area within the home, where standard workplace provisions can be nil-valued.
 

Fixed Expense Allowances and Standard Amounts

Fixed allowances remain possible if substantiated by actual expenses or equivalent to the Dutch government collective labour agreement. Standard rates apply, such as €3.95/€4.05 per day for meals, and €2.40/€2.45 per home working day.
 

Annual Settlement and Group Scheme

Exceeding the discretionary margin results in an 80% final levy, payable during the declaration of the second period of the following year. The group scheme allows combining discretionary margins within a corporate group but limits the higher discretionary allowance to once per group.
 

More information

For more information about this subject, you can read the advisory handbook.
 

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