The financial year 2021 is coming to an end and that means that the bookkeeping needs to be finalized. An important matter for employers is the so-called Work Related Expense Scheme (in Dutch ‘Werkkostenregeling’ or ‘WKR’). We are happy to help you with organizing the WKR administration.
What is the WKR?
Employers are allowed to remunerate part of the total fiscal wages (the so called free space) untaxed for employees. Think of the example of costs of an office party, Christmas gifts, or lunch at work. No wage tax is owed over the amount that falls within the free space. On the amount above the free space, 80% wage tax must be paid by the employer. Further, the WKR legislation also allows for a number of remunerations, such as travel expenses, to always be tax free without using the free space.
It is important for employers that the WKR is being used effectively. Furthermore, an incorrect application of the WKR may lead to incorrect tax declarations which may mean risks of back taxes and the possibility of fines.
Make optimal use of the free space!
Due to the (ongoing) corona restrictions, the Dutch government has decided to increase the free space in 2021: the free space in 2021 is 3% on the fiscal wage up to and including € 400,000. For any amount over € 400,000 the percentage is 1.18%. For example, if the total fiscal wages in 2021 are € 500,000, the free space is € 13,180 (€ 12,000 + € 1,180).
You can use, for example, the (extra) free space to pay employees an untaxed bonus. According to the Dutch Tax Authorities, remunerations (including bonuses) up to a maximum of € 2,400 per employee per year may be included in the free space. Further, you can use the (extra) free space to improve the home workplace of the employees, for example providing a good office chair, or a bigger Christmas gift.
If you have further questions about the above options or measures or if you would like further information, please contact us.