Fixed travel allowance extended and changes to free space WCR 2021
Fixed travel allowance may still be continued until April 2021
On 21 January 2021 the Dutch government announced that employers are still allowed to reimburse fixed net travel allowances until 1st April 2021.
Do your employees receive a fixed travel allowance, and do they work (almost) entirely from home due to Covid-19? In that case, the fixed travel allowance does not have to be adjusted as of February 1st, 2021, as was mentioned in our earlier correspondence in December.
At least up to and including March 31st, 2021, the fixed travel allowances may be reimbursed free of tax. Even when these travel costs are no longer made by the employee as a result of working from home. However, the condition remains in place that the employee should have already been granted the fixed net travel allowance before March 13, 2020.
In March 2021, the government will announce how it intends to deal with the reimbursement of fixed travel allowances after March 31st, 2021. We will keep you updated about any new developments.
Please note that the reimbursement of exterritorial expenses under the 30% ruling is excluded from the measure as described above.
Changes to free space work-related cost scheme 2021
The Dutch government has announced that the free space of the work-related cost scheme will be increased for 2021.
At the end of last year, it was announced that the free space (i.e. tax free budget) of the work-related cost scheme would be decreased from 3% to 1.7% over the first € 400,000 of the wage sum per withholding agent. However, it has now been announced that this year the budget on the first € 400,000 will be the same as for the year 2020. This means that the budget is calculated as 3% over the first € 400,000 and 1.18% over the part above € 400,000 (total taxable wage sum per withholding agent for 2021).
Why these changes for 2021?
The Dutch government announced this as one of the measures to support entrepreneurs during the corona crisis. Entrepreneurs can provide reimbursements and benefits via the free space of the work-related costs scheme without the employees having to pay tax on these. An employer can decide how they wish to use the free space (i.e. what to put in the budget), as long as the reimbursements or benefits are customary.
Despite the fact that the allowances and benefits that have been put in the budget are tax-free for the employee, entrepreneurs do of course have to incur costs to actually pay these allowances or benefits to their employees. Examples of reimbursements or benefits are Christmas gifts, gift vouchers or company outings. But also a monthly net fee for working at home can be reimbursed free of tax to the employees by making use of the budget. Do note that should the budget be exceeded at the end of the year, the surplus is taxed against a rate of 80% at an employer’s level.
If you have any questions about the fixed travel allowance, the free space WCR 2021 or other payroll related questions, feel free to contact the specialists at Crowe Peak.