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Work-related costs scheme

Work-related costs scheme (“Werkkostenregeling”)

Under the Work-related costs scheme (“werkkostenregeling”) the employer can reimburse work related costs tax-free to employees. This scheme can be used for pretty much anything. For instance presents with Christmas, staff outings but also bonuses. In 2024 the total allowances under this scheme cannot be more than 1.92% of the first EUR 400,000 of the wage sum and 1.18% of the remainder. Amounts exceeding this free space will be taxed at a rate of 80%.

Less than 30% deviating from what is usual

An important condition is that the allowance is less than 30% deviating from what is usual “in comparable circumstances”. These circumstances include other employees of the same employer, colleagues of the employee in the same function category or employees of other employers.

Factors that decide whether the benefit is usual include its type and value, who gets it and whether tax rate advantages play a decisive role. The Dutch tax authorities assume that the allowance is usual if the amount is no more than EUR 2,400 per person annually.

If an allowance to an employee does not fit in the free space of the Work-related costs scheme or the exceptions (i.e., the assigned exemptions or nil valuations, see below) then it will be treated as taxable wage. The 80% levy for allowances exceeding the aforementioned free space of the Work-related costs scheme can be prevented. For that the employer should treat the expenses as taxed wage of the applicable employee (and hence keep it out of aforementioned scheme for the Work-related costs scheme).

Some allowances can be provided tax-free without using aforementioned free space of the Work-related costs scheme. These are the are assigned exemptions and nil valuations.

Assigned exemptions (“gerichte vrijstellingen”):

  • for business trips max 23 cent per km or the actual travel expenses;
  • temporary stay for the employment, such as overnight stays during business trips and meals
  • relocations for employment
  • what is obtained under the 30% ruling or what is obtained as reimbursement for actual extraterritorial costs if the 30% ruling is not available, e.g.:
    • expenses for requesting a residence permit or Dutch driving license
    • expenses related to higher prices in NL
    • expenses of vaccinations
    • part of initial housing expenses
    • expenses for home leave (e.g. family visit)
    • extra expenses for completing personal income tax return
    • expenses learning Dutch
  • phones, computers and other tools and equipment
  • business related lunches and meals during overtime
  • courses, conferences, professional literature et cetera for maintaining and improving the knowledge and skills required for work, registration in a professional register and outplacement
  • Study and education for the purpose of acquiring (more) income. The schooling must contribute to the maintenance and improvement of knowledge and skills. The criterion here is whether the training or study objectively contributes to the proper fulfillment of the employment relationship. The tax administration has published in this regard this paper. Conditions include:
    • the expenses are not already covered by someone else.
    • the study or education has the aim of fulfilling a profession in the future.
    • The employer has provided or promised the reimbursement before the end of the calendar year in which the costs are incurred.
  • Discount on products from own company
  • Occupational health and safety facilities
  • VOG (declaration of conduct)
  • Additional costs associated with working from home

Nil valuations

Allowances in kind provided on the working place can also be provided tax-free. These so-called nil valuations (“nihilwaarderingen”) are for instance:

  • Facilities that your employee uses or consumes at the workplace, like a desk or copier. But also corporate fitness, for which a condition is that it is intended to eliminate or reduce the risks to the health of employees with a targeted fitness program. This should be fitness that is important for maintaining the fitness required for the performance of the employees’ work. This only has a chance of success from a tax perspective if there is a targeted plan for company fitness and that plan is part of the arbo (occupational health and safety) plan. It does not matter whether the workplace-related fitness actually takes place at the workplace or outside the workplace: in both cases the fitness is untaxed. This only applies to cardio and strength training, not wellness facilities.
  • consumptions on the workplace that are not part of a meal, for instance coffee
  • work clothing under conditions
  • the interest benefit of a staff loan if employee uses it to purchase an (electric) bicycle or electric scooter
  • public transportation if also used for work
  • accommodation and lodging (including provided utilities, water and laundry) made available at the workplace for the fulfillment of the employment if employee does not live at the workplace and reasonably needs to use this facility.
  • provisions in the working space at home
  • provisions that stay at the working space, e.g. computers
  • mobile phones

Administrative obligations Work-related costs scheme

When applying the Work-related costs scheme amongst other things the following must be recorded:

  • The allowances and benefits in kind assigned to the free space. There is no need to record at employees’ level.
  • The allowances and benefit in kind not assigned to the free space are treated as individual wage of the employee. Those need to be recorded at employee’s level.
  • Assigned exemptions must be entered in the records at employee’s level.