The “werkkostenregeling” (work related costs scheme) will be compulsory for each company in the Netherlands. The obligatory final date has been postponed a few times but it is final now. The work related costs scheme replaces the old system of tax free allowances and reimbursements.
Under the new scheme all allowances and benefits in kind to employees, in principle qualify as wages. Only certain defined intermediary costs, specific exempt costs and a few specific benefits are excluded.
The following are supplementary measure to previous announcement and should be taken into account as of January 1, 2015:
- the budget for work-related expenses will be reduced to 1.2% of the total wage costs;
- introduction of a ‘necessity criterion’ for a limited number of benefits such as tools, computers, tablets and mobiles; the benefit is tax free if the employer considers provision of the benefit is necessary for business use;
- introduction of a group-based scheme: the designated benefits as well as the employment cost budget of all group companies can be combined;
- the tax due under the work related expenses scheme needs to be determined once a year only any tax due may be paid in the first tax period of the subsequent calendar year;
- benefits in relation to the work place will be treated in a similar way;
- exemption for staff discounts on the purchase of products to be reintroduced from 2015
- the costs to be recorded under the work-related expenses scheme should include VAT;
Employers need to determine whether the costs reimbursed to the employee can be reimbursed tax free to the employee next to the 1.2% budget or whether the costs should be considered taxable income to the employee or whether the 80% final should be paid by the company.