New rules for reimbursing employee expenses in the Netherlands

The Work Expenses Scheme (werkkostenregeling or WKR) is a fiscal programme that was introduced in January 2011, but will only become compulsory for all employers from January 1, 2015.

As a result, all companies and businesses need to make sure their administration is ready for the revised expense allowance scheme.

Changes in regulation

Under the current arrangement, it’s possible for employers to compensate employees tax-free for certain expenses, whilst some expenses can be compensated partially tax-free, and others not tax-free at all. To simplify the arrangement, the government decided to introduce the WKR.

Under the revised expense allowance scheme, all remunerations and provisions to employees are regarded as salary, and are therefore subject to tax. However, employers will be allowed a nominal budget of 1,2 per cent of the total combined taxable salaries the company pays out, for expense allowances.

If an employee is reimbursed, the employer must indicate in the salary administration whether the reimbursed expenses fall under the WKR, or if they are classified as gross payments, for which the employee will pay wage tax.

Exceeding the expense limit

If an employer’s annual WKR reimbursements to employees is higher than 1,2 per cent of total annual salaries, then the company is required to pay 80 per cent tax on the excess amount.

Costs covered by the WKR

Some examples of costs that could fall under the expense allowance scheme include:
› Lunch provided by the employer
› Christmas gifts
› Company bicycle
› Staff outings

Tax-exempt expenses

Some expenses do not fall under the WKR, and can still be provided tax-free. These include:
› Costs of conferences and courses
› Training and education fees
› Public transport travel expenses, or the provision of a public transport season ticket or off-peak railcard
› Other business travel expenses for the employee’s own vehicle, at a rate of 0,19 cents per kilometre
› Computers, tablets and mobile telephones (if used for business purposes)

Tax neutral expenses

There are also a number of resources and items that can be made available to employees in the workplace (which can be valued at zero for payroll tax purposes) including:
› Workplace gym
› Food and drink at the workplace that are not designated as meals
› Company clothing, if bearing a logo

Prepare your business

Even if many expenses are still tax-exempt under the new rules, it is advisable for employers to clearly identify and track the costs they reimburse to employees, considering that any WKR expenses that exceed the limit will be taxed at 80 per cent.

Additionally, it is worthwhile considering whether you, as an employer, wish to implement a different policy concerning employee expenses for 2015.
 

Patricia van der Hut is a partner at Broadstreet, providing specialist tax and accountancy services to expats.