WKR Regeling 2021

The expense allowance scheme (WKR) has been mandatory since 2015, but it remains a difficult subject. Which allowances are taxed and which are not? What are the new rules as of January 2021? We will tell you more about the expense allowance scheme in this HR topic.

What exactly is the Expense Allowance Scheme (WKR)?

The WKR scheme, or the Expense Allowance Scheme, provides the opportunity to provide goods or items to staff tax-free. This could include a business phone, a travel subscription for the train or a gym membership. There is a maximum to these tax-free allowances.

Tax-free allowance of the Expense Allowance Scheme

The tax-free allowance is determined as a fixed percentage of the taxable wage bill. If you exceed the free space, you pay a final levy of 80%.

The tax-free allowance of the Expense Allowance Scheme increased in 2020...

In 2020, the conditions of the tax-free allowance were adjusted. The discretionary margin was increased to 1.7% for the first €400,000 of the wage bill and a margin of 1.2% was maintained on the remainder of the wage bill. Due to the coronavirus pandemic, the tax-free allowance on the first €400,000 of the wage bill was even increased to 3%.

... and reduced again in 2021

From 2021, the increase will be reversed to the original 1.7%. In addition, the tax-free allowance on the remainder after €400,000 will be reduced from 1.2% to 1.18%. Companies with a wage bill of up to €400,000 will not be affected by this, but for larger companies it entails a risk of the final tax payment of 80%.

Exceptions on tax-free allowance of the Expense Allowance Scheme

Not all reimbursements and benefits in kind within the Expense Allowance Scheme are at the expense of the tax-free allowance. In addition to the tax-free allowance, there are three other options for compensating employees for things, namely intermediary costs, a specific exemption and a nil valuation.

Intermediary costs Expense Allowance Scheme

Intermediary costs are costs incurred by the employee on behalf of the employer. These include business costs that the employee advances and then claims back as expenses, such as parking costs or a gift purchased for an employee. These allowances do not fall under tax-free allowances and are not regarded as wages, so employers do not have to pay tax on them.

Targeted exemption from the Expense Allowance Scheme

In addition to intermediary costs and the tax-free allowance, the Tax and Customs Administration has also exempted a number of allowances and benefits in kind. The following items are not at the expense of your tax-free allowance and you may reimburse tax-free:

Mileage allowance for commuting (up to 19 cents per km)
Reimbursement for applying for a Certificate of Good Conduct (VOG)
Meals during overtime or late-night shopping
Business overnight stays
Training courses, conferences or professional literature
Computers, phones, tools
Occupational health and safety facilities (in the workplace and outside the workplace)

For an exact overview of the specific exemptions, we refer you to the Wage Taxes Handbook (Handboek Loonheffingen) and the 2021 Wage Taxes Newsletter (Nieuwsbrief Loonheffingen 2021).

Expense Allowance Scheme company allowances

Nil valuation of the Expense Allowance Scheme

The nil valuation is used for the reimbursement of facilities at the workplace. A condition for the untaxed nil valuation is that it concerns wages in kind and not compensation in money. This may include drinks, such as coffee and tea, or equipment or setting up a work station. Some things that fall under the nil valuation in the Expense Allowance Scheme are:

Consumptions that are not part of a full meal, such as coffee, tea and fruit.
Equipment that is used at least 90% for business, such as laptops.
Company gym, but only when gym sessions takes place at the workplace. Is it a subscription to a gym nearby? In that case, this compensation does fall under the tax-free allowance.
Company clothing worn during working hours.

Nil valuation of the Expense Allowance Scheme work clothing

Allowances outside the tax-free allowance

Does the total amount of all allowances to your employees exceed the tax-free allowance? Then you have to pay 80% tax on the excess amount spent in the form of a final tax payment. That is a high percentage and may not be recovered from the employee. To prevent you from going over the free space, it is important to be able to consult current data. Fortunately, our Polaris or Delta HRM software offer the possibility to track the tax-free allowance through a clear report. Our payroll software includes a Expense Allowance Scheme option to keep track of all amounts you donate to staff, so you can process the amount of the total taxable wage bill on your tax return.

2021 Expense Allowance Scheme bicycle

Did you know that in 2021 you can also be reimbursed for a bicycle under the Expense Allowance Scheme? We previously wrote about a company lease bicycle, which can offer a solution for small organisations with little tax-free allowance.

Would you like to know more about the consequences of the Expense Allowance Scheme for your organisation?

Do you have any questions about the changes to the tax-free allowance and Expense Allowance Scheme in 2021 and what consequences this will have for your organisation? Please contact us, we will be happy to help you.