International employership 21 December, 2023

Work-related costs scheme (WKR) 

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Work-related costs scheme (WKR) 

Utilize the free space before 2024

As the holiday season draws near, enveloping us in cheer and festivity, here is a heartfelt reminder to all employers aiming to maximize the remainder of 2023: the Dutch Work-related costs scheme (WKR) presents a gift-wrapped opportunity for you! Seize this chance before the year ends to provide your employees in the Netherlands with the best you have to offer. Curious to learn more about the benefits of the WKR or seeking personalized advice? Reach out to your specialist at Crowe Peak. 

Work-related costs scheme (WKR) 2023 

Under the WKR scheme, employers can offer untaxed allowances to employees, such as Christmas gifts or end-of-year bonuses. If the total untaxed allowances provided to employees fall within the designated “free space,” no tax (final levy) needs to be paid by you as employer. 

For 2023, the free space comprises 3% of the initial €400,000 of the combined wage bill for all employees (working in the Netherlands). Beyond €400,000 of the wage bill (of employees working in the Netherlands), the free space is 1.18% of the total wage bill. 

Which costs are covered by the “free space”? 

  • Christmas hampers and other small gifts (e.g., a Christmas treat such as a Dutch “kerststol”). 
  • Parking, ferry, and toll fees incurred with personal vehicles. 
  • Company fitness expenses (excluding workplace facilities). 
  • Home office-related costs for employees. 
  • Interest benefit stemming from an employee loan 
  • Travel expenses exceeding standard rates (e.g., mileage reimbursement exceeding € 0.21 per kilometer). 
  • Staff gatherings and work-related travel expenses. 
  • Contributions to staff associations, and more. 

Actions to take 

To effectively utilize the work-related costs scheme, consider the following steps: 

  1. Ascertain whether the compensation, allowance, or provision constitutes as “wages,” as the work costs scheme specifically applies to wages. 
  2. Verify whether the reimbursement, allowance, or provision falls under targeted exemptions or nil valuations. In certain cases, it may be possible to avoid using the free space. 
  3. Decide whether to categorize the compensation, allowance, or provision as a final levy or treat it as part of the employee’s wage. 
  4. Calculate an 80 percent final tax on the amount exceeding the free space (if applicable). 

For the sake of completeness, it is important to note that WKR expenses must be designated at the time the employer reimburses or provides them. It is not permissible to designate them afterwards or retroactively. However, costs can still be designated as long as this is done in 2023! The final levy of 80% (if applicable) on the designated work costs exceeding the allocated budget must be reported in the wage tax return by February 2024. To maximize the benefits of the Dutch work-related cost scheme, employers should analyze whether the designated employee benefits have been processed in the payroll in accordance with this scheme. Looking for help while finalizing your WKR expenses? Please contact our payroll team. 

Maximizing WKR benefits: Assessing allocations and planning 

Crucial in WKR is to verify whether the employer has fully utilized the tax-free budget, or if there is still available allocation (for offering an allowance for remote work, a Christmas gift, or other perks for your employees), or if the employer might eventually incur an 80% final levy on the surplus. 

Are you contemplating utilizing the WKR this year, or are you uncertain about providing your employees with tax-free benefits? If you want us to forecast the total available free space for 2023 or the upcoming year 2024, please contact our specialists. 

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