The central plank of WKR, the Work Related Expense Scheme, is that it treats all allowances and disbursements – including those that are wholly commercial in nature – made available to members of staff as wage components. The scheme provides for a free margin, within which allowances and disbursements may be distributed on a tax-exempt basis and which amounts to 1.2 percent of the wage bill for tax purposes. As an employer you would do well to bear in mind that any allowances and disbursements you make to your staff in excess of the annual free margin will incur an 80 percent final levy.
N.B. Next year’s free margin for the first 400,000 euros of the wage bill is increasing by half a percentage point to 1.7 percent.
Year-end and other bonuses tend to be made on a gross basis. You may be able to make (some of) these payments on a tax-exempt basis by classifying them as a travel allowance. You may still have some of the free margin left over to accommodate the tax-exempt payment of bonuses.
Separate exemptions that do not make inroads upon the free margin apply to certain allowances and disbursements. The amount by which an allowance exceeds the applicable standard will be treated as wages for which the employee has tax liability. Some allowances do not require anything to be added to the employee’s wage as they are valued at nil.
Dutch version: Benut de mogelijkheden van de werkkostenregeling