In this article we would like to provide you with a brief description of the Dutch Work Cost Regulation. The purpose of this leaflet is to provide an overview of the conditions and the requirements  to apply for or extend a Dutch WKR.

Introduction to the WKR

The WKR  became compulsory for all employers on 1 January 2015. The general  principle for wage tax purposes is that all reimbursements and benefits in kind provided to the employees are considered wages and are, in principle, taxable.  
What is not considered a taxable benefit

For the purpose of wage tax, some items are not considered a taxable benefit:

  • Small gifts provided by an employer to an employee are not considered a wage tax benefit in the following circumstances:
    • The gift is provided for an occasion for which it is common for individuals (other than the employer) to offer a similar gift, such as a birthday present, or funeral wreath 
    • It does not concern money or vouchers/gift cards;
    • The benefit does not have an invoice value higher than €25;
  • Intermediate costs: costs that an employee does not incur for himself, but on behalf of the employer and for the employer’s account;
  • Specific excluded items such as (but not limited to) a one-time jubilee allowance for employees (with a maximum of one monthly salary) for a service time of 25 or 40 years, one-time payment in the event of death (under circumstances).

The WKR

If the employee does receive a taxable benefit, the employer can designate such a reimbursement or provision to the free space of the WKR. Please note, the reimbursement from employment must meet the customary use criterion. If the designated benefit differs more than a significant degree (more than 30%) from what is customary, it may not be designated as a final taxable benefit within the WKR. In the view of the Tax Authorities, reimbursements or benefits that do not exceed €2,400 per employee per year are deemed customary. Further, some items are excluded from the WKR/final levy payments, such as the taxable benefit in kind for the private use of a company car.

Specific exemptions, nil valuations and low (fixed) amount valuations

Within the WKR, you can reimburse certain expenses, provide benefits in kind, or make provisions for employees tax free if it concerns the so-called specific exemptions. These include business travel expenses by public transport (100% compensation), travel expenses by own transport (max. € 0.23 per km for 2024), course costs, study and training, meals during overtime and business travel, extraterritorial costs (e.g. 30% rule), moving costs up to € 7,750 and the transfer of the household contents, costs of tools and ICT equipment, items related to health and safety regulations, costs for a certificate of good conduct, and products from the company’s own sector. A tax-free travel expenses allowance must be based on the actual journeys made. For remote working days an allowance of € 2.35 per day (2024) can be granted tax free. 

Nil valuations are benefits in kind that fall within the free space (free space), but are valued at nil. These are workplace related facilities (such as coffee/tea at the office), which can nevertheless be provided wholly or partly untaxed.

Certain benefits in kind represent a fixed taxable amount, i.e. lunches (meals) at the office that have no business background, and are valuated at €3,90 (2024). These items are in principle taxed, but can also be brought into the free space. 

Free space

Reimbursements and benefits in kind that the employer designates as final taxable income fall into the free space of the WKR. As long as reimbursements and benefits in kind no not exceed the maximum amount of the free space, they are tax free (taking into account the customary use criteria). The free space is a percentage of the taxable wages of the complete staff.  For the total taxable wages of the employees up to and including € 400,000 the free space percentage is 1.92%. Over the excess of the total taxable wage of € 400.000 , the free space is 1.18%. The percentage changes annually, so it is important to check this each year in January.

If the free space is exceeded, a 80% final tax levy has to be paid by the employer on the excess.

Designation to the free space:

The Supreme Court clarified in April 2024 how an employer can designate a reimbursement, allowance or provision as final taxable benefit  in the free space. Without such a timely designation, the allowance is individually taxed with the employee, but can be grossed-up if the employer takes the applicable wage tax for its account. For designation, the following applies:  

  • The way in which an employer can designate is in principle free of form. This can be done, for example, by recording in the administration and/or including the items on specific general ledgers appointed for the WKR.
  • The employer must be able to make it plausible that such a designation has taken place.
  • The designation to the WKR must be made no later than the moment the benefit or reimbursement is provided to the employee. This will generally be at the time of payment of the allowance.

More information?

Should you have any comments or questions, or if you require our assistance with implementing the WKR, please contact your trusted RSM advisor.