Reimbursements to Staff
members in the Netherlands
Can I still pay my employee an untaxed expense allowance?
As an employer, you must take into account rules on whether or not to tax reimbursements and the provision to your employees. Under the work-related costs scheme, you can spend a maximum of 1.2% of your total taxable wages on untaxed benefits and benefits in kind for your employees. What is covered by the work-related costs scheme? And what if you exceed 1.2%? KHN lists the most frequently asked questions about the work-related costs scheme.
The new rules on whether or not to tax reimbursements and the provision to your employees apply from 1 January 2015. This is the work-related costs scheme.
What should you do with fixed fees?
If you want to give a fixed cost reimbursement for (certain) of the aforementioned cost categories, it is mandatory under the work-related costs scheme to conduct a random sample survey among the employees in advance to substantiate that reimbursement. If an employer does not meet this condition, or if he gives an excessive compensation (0.24 euros per kilometre for travel costs), then (the excessive part of) the compensation falls within the free space of 1.2% of the wage bill.
What happens if you exceed 1.2%?
The amount that exceeds the working cost allowance of 1.2% of the taxable wage bill forms the 'final levy wage'. The employer must pay a final tax rate of 80% on this final levy wage. This final levy is not compulsory. The employer can escape this by agreeing in advance with the employee that a certain reimbursement or provision by both of them is regarded as wages.
The employer may not recover the final levy of 80% from the employees. Because there is a final levy wage, the employer does not owe any employee insurance premiums or the Health Insurance Act on this. Employees, on the other hand, do not receive any benefit rights on this final levy.
What about meals?
If you provide meals to employees, the Tax and Customs Administration will use a value (standard amount) of 3.35 euros per meal in 2019. This standard amount applies to breakfast, lunch and dinner. This means that the EUR 3.35 must be regarded as the employee's wages or that it must be included in the fixed amount of the work-related costs scheme. You can deduct any employee contribution from this amount, but 3.35 euros is the maximum.
If the meal has a more than incidental business interest (employee eats between 5 pm and 8 pm), the meal can be reimbursed or provided tax-free.
The standard amount for canteen meals (breakfast, lunch or lunch) is € 3.35 in 2019.
What does a staff party include?
A company party in the company itself is exempt, Company parties outside the company, for example in a catering company, are not exempt. Costs for maintenance and improvement of the knowledge and skills for fulfilling the employment are specifically exempted. This includes, among other things, courses, congresses, seminars, symposiums, excursions, study trips, even if they are given in a catering company. This does not, therefore, fall under the free space of the work-related costs scheme.
The work costs scheme in brief
Employers can give employees compensation, such as a company bicycle or a Christmas package. This may only be tax-free if the total amount does not exceed 1.2% of the taxable wage bill. This is called free space.
What is covered by the work-related costs scheme?
The following reimbursements and benefits in kind fall under the 1.2% taxable wages for the full value:
Internet at home
Legal assistance employee in case of the dismissal procedure
Products from own company
Shares in company employer
Bill staff parties and trips (Consumptions and snacks and staff parties at the workplace are tax-free (nil appreciation))
Trade union contribution
What is not covered by the work-related costs scheme?
Compensations or benefits in the context of courtesy, sympathy or out of piety, for example:
- Flower in case of illness, card for marriage
Intermediary costs (a reimbursement on a declaration basis), for example:
- The employee will have dinner with business partners and declare this
Specific exemptions, for example:
- Commuting costs (up to a maximum of 0.19 euros per kilometre)
- Business overnight stays
- Meals at and outside the workplace as a result of overtime, shopping evenings and the like
- Costs of maintenance and improvement of the knowledge and skills to
fulfil the employment relationship. This includes professional literature,
courses, congresses, seminars, symposia, excursions, study trips and
registration in professional registers
- Further training
Nil-valuations, for example:
- Facilities in the workplace that are not commonly elsewhere
used or consumed(think of the use of the workplace itself, fixed
computer, copier, writing utensils, paper, fixed telephone, coffee and
soft drink machine)
Clothing that the employer makes available and which is exclusively or almost exclusively suitable for wearing during working hours (think uniforms, the apron of the catering employee)
Consumptions at the workplace, which are not part of a meal
Provided aids such as computers and similar equipment that employees can also use outside the workplace and are used for 90% or more business purposes
Provided mobile means of communication (no computers and the like) that are also used in the workplace used and that are used for more than 10% for business.
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