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The working expenses scheme. Created as a simplification because it replaces all the different rules and laws surrounding allowances and benefits in kind to employees and bundles them into one collective scheme. But if employers do not make full use of the WKR budget, as the National Working Costs Scheme Survey 2016 shows, they are not taking full advantage of the savings on social charges. Moreover, employers deprive their employees of tax benefits.
WKR
Since 2015, the working expenses scheme (WKR) has been mandatory for all employers in the Netherlands. Within this scheme, employers can spend a maximum of 1.2% of the total fiscal wage (WKR budget) on untaxed allowances, benefits in kind and provisions for employees. Payroll tax in the form of a final levy of 80% must be paid on the amount above the free margin. In addition, employers can continue to compensate, provide or make certain items available untaxed by using the so-called targeted exemptions. The WKR budget can be spent on company outings, cafeteria scheme and Christmas hampers.
National Workfare Survey
From the National Workfare Survey 2016, conducted by research firm Effectmeting, shows that employers in the Netherlands (with 10 employees or more) left almost half a billion of the working expenses budget unused in 2016. 26% of respondents cite fear of exceeding the budget as the reason for this. A shame because this deprives employees of tax benefits and the employer does not take full advantage of the savings on social charges.
Avoid exceeding the WKR budget by categorisation
When employees declare expenses, the Tax Authorities consider the reimbursement as salary unless you categorise and substantiate the expenses. If you fail to do this or do so partially, the reimbursements and allowances will be deducted from the free allowance. You even risk having to categorise the expenses as wages for tax purposes. In the worst case, if you fail to ensure timely accounting in the payroll records or if you misclassify certain allowances and benefits in kind, a retrospective tax of 80% may follow. If your organisation properly categorises expenses according to the designated work expenses, you need not fear exceeding the budget and make maximum use of tax opportunities. This not only results in happy employees but also substantial savings.
