Increase of the free space under the work-related costs scheme (WKR) 2020
Topicality | 1 July 2020
The work-related costs scheme (WKR) is mandatory for all employers. The WKR allows you to spend part of your total fiscal wage (the free space) untaxed on, for example, travel expenses, telephones or computers for your employees.
How does the WKR work?
You do not pay wage tax on the amount that falls within the free space. On the amount above the free space 80% wage tax is due as final levy. You do not have to pay national insurance contributions, employee insurance contributions and employer’s levy Zvw or withhold Zvw contributions.
Corona crisis and WKR
The State Secretary published on June 18, 2020 the updated Decree ‘Tax concessions in response to the Covid-19 crisis’. The main points of attention for the WKR are explained below.
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Increase free space from 1.7% to 3% up to €400,000
The free space over your fiscal wage up to and including €400,000 will be increased from 1.7% to 3% (due to covid-19) in 2020. This will enable you to provide extra support to your employees during covid-19. You can reward your employees extra thanks to this broader WKR. In 2020 you can reimburse an additional total amount of €7,200 untaxed allowances to your employees.
You can also reimburse something that can be of private benefit to your employees. For example, additional costs (printing paper, printer cartridges etc.) for working from home.
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Office space at home is not a workplace
An office space at home is not a workplace for wage tax purposes. This means that facilities for the home office, unless there is still free space, are only tax-free if a special regulation applies (e.g. the specific exemption for necessary tools, computers, mobile communication equipment and internet costs at home, the specific exemption for occupational health and safety provisions and the targeted exemption for tools). Among other things, the zero valuation for workplace facilities does not apply. In practice, this may mean that, for example, paper or cartridges for the home printer can only be provided untaxed at the expense of the free space, while the employee cannot go to his normal workplace.
Therefore, bear in mind that if an employer makes allowances that do not fall under the targeted exemption from the necessity criterion or for occupational health and safety provisions, these allowances should be designated as final tax-deductible wages and be charged to the free space of the work-related expenses scheme.
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Commuting allowance can be paid untaxed also after 6 weeks of absence due to covid-19
Employers may pay an allowance for commuting expenses untaxed to the extent that the allowance does not exceed €0.19 per kilometer. Fixed travel allowances can be determined in accordance with the so-called practical arrangement. In the event of an (expected) absence of more than 6 weeks, the fixed travel allowance can no longer be paid untaxed in the following month.
However, the State Secretary considers this undesirable under the covid 19 situation and therefore approves the following: an employer – during the operation of the covid 19 decree – does not face any consequences of a change in the employee’s travel pattern. The above means that – if the employer continues to pay the fixed travel allowance (which meets the regular fiscal conditions) – this allowance will retain its untaxed character.
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Public transport
A nil valuation applies to the provision of a public transport pass if the employee uses the public transport pass (also) for travel for work. According to the manual on payroll taxes (in short) this is the case if the employee usually uses the public transport pass for business travel on at least 10% of the working days in the pay period. Normal interruptions, such as a short period of illness or leave, do not affect compliance with the condition. . In the event of an (expected) absence (working from home due to covid-19) of more than one month, the fixed travel allowance can no longer be paid untaxed in the following month.
However, the State Secretary considers this undesirable under the covid 19 situation and therefore approves the following: an employer – during the operation of the covid 19 decree – does not face any wagetax consequences of a change in the employee’s travel pattern. The above means that – if the employer continues to pay the fixed travel allowance (which meets the regular fiscal conditions) – this allowance will retain its untaxed character.
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Other fixed expense allowances
If the employee receives a fixed (expense) allowance and works (almost) entirely at home because of the covid-19, the employer does not have to adjust the fixed allowance. As long as the crisis measures apply, the employer may rely on the facts on which the fixed expense allowance was based. The condition is, however, that the entitlement to the fixed allowance was fixed no later than 12 March 2020.
Please note; this approval does not apply to reimbursement of extraterritorial costs under the so-called 30% ruling.
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Mouth shields
Employers are allowed to reimburse the cost of a mouth shield that employees have to wear in public transport as from 1 June 2020 untaxed. This is a specific exemption.
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Addition of meals in company canteen
We advise you to stop the addition for meals enjoyed in a company canteen if the employees do not make use of it due to working from home.
Other WKR extensions per 1-1-2020
Company (electric) bike and so-called speed pedelecs
From 1 January 2020 there will be an alternative to the bicycle plan, namely the company bike scheme. Just as with cars, the employer can make a bicycle available to employees. This is deemed to be a benefit in kind for an amount of 7% of the (catalogue) value of the bicycle, regardless of the number of (private) kilometers.
From 2020 onwards, therefore, no mileage records need to be kept for the company bicycle.
Incidentally, this lump-sum valuation rule does not apply to accessories purchased with the bicycle that are not included in the catalogue price (such as panniers, rain suits, etc.). This is subject to the normal valuation rules for wages in kind. At the moment there are no known legal impediments to designate the wage advantage of the provided bicycle as final tax pay at the expense of the free space.
If the employee uses the company bike for commuting, the employee is not entitled to a tax-free mileage allowance for the kilometers travelled. It therefore should be checked case by case which option is most attractive.
Exemption for the Certificate of Good Conduct (VOG)
On 1 January 2020, a specific exemption was added: the costs of an application for a Certificate of Good Conduct (VOG) are tax free.
Extending the final moment of declaration and remittance of the WKR final levy
Do you reimburse or provide more than the amount of free space? Then you pay tax on that part. From now on, you may settle this later: at the latest when you submit your wage tax return for the second return period of the following calendar year instead of the first return period.
For more detailed information about the WKR, we refer to our whitepaper Expense Allowance Scheme 2020.
Do you have any questions?
Please feel free to contact us for the 2020 work-related costs spreadsheet, you can use to be in control of your working expenses.
Author
Nico Vlug
