The WKR ('Werkkostenregeling') in the Netherlands
Starting the 1st of January 2015 the WKR in the Netherlands is simplified and is no longer optional as it was in previous years. This means that all employers are obliged to apply the WKR in their Dutch salary administration. The changes are also relevant for foreign employers who maintain a Dutch payroll.
The WKR: how does it work?
The WKR is a fairly new regime for tax-free allowances and benefits for employees and can be applied by employers since 2011. Under the WKR in principle all allowances and benefits qualify as taxable wage of the employees. Some allowances or benefits that used to be tax free may become taxable.
Employers have a general fixed budget of 1.2% of the taxable wages and they can choose to pay or grant allowances and benefits from that budget . For the employees this means that the allowances or benefits are tax free. The employer will only be subject to tax if the total amount of allowances and benefits exceeds the general fixed budget of 1.2%. If so, the excess will be subject to wage tax against a final rate of 80% (payroll tax). The fixed sum is 1.2% as of January 1st 2015 (and was 1.5% before).
Next to the general fixed budget, employers can pay or grant allowances and benefits tax free (under conditions), which are listed in the Dutch wage tax act (such as travel expenses, extraterritorial expenses). Our colleagues in the Netherlands have developed a calculation tool for employers to determine if their allowances and benefits are tax free under the WKR or if the payroll tax is due.
Changes WKR 2015
The legislator has introduced the following changes in the WKR as per 1 January 2015:
- Tools, computers, phones and other similar devices: The employer can determine if tools, computers, phones (or other similar devices) are necessary for the employees to perform their job properly. If so, such benefits can be granted or reimbursed tax free to the employees next to the fixed budget (no payroll tax due).
- Annual instead of monthly payment: Employers only need to determine once a year if the payroll tax of 80% is due. The settlement can take place after year’s end, in the first wage tax return of the next tax year.
- Company products (discount for employees): Employee discounts in relation to company products will under certain conditions become tax free next to the fixed budget (no payroll tax due).
- Group facility: The WKR generally applies to individual employers. A group facility will be introduced, which results in a ‘consolidated’ budget for all participating employers within the group (a share requirement of 95% applies).
- Workplace related facilities: A number of workplace related facilities are not subject to tax if they are provided by the employer and the ownership will not shift to the employees. They will also become tax free if the employee would become the owner of the facilities.
To be able to implement the abovementioned changes on a budget neutral basis, the fixed budget was reduced from (1.5% as it was before 2015) to the present 1.2%.
Be prepared
The implementation of the WKR can be complicated. Employers must be well aware of the tax consequences of their current allowances and benefits under the WKR. Employers are likely to adjust their financial and salary administration and it may still be desired (or even necessary) to amend the labour conditions of the employees.
Our colleagues of VGD De Beer in the Netherlands have a broad experience in assisting employers with the implementation and administration of the WKR and they can answer all your questions regarding the ‘WKR’.
Contact
Sven Verbruggen,
VGD De Beer,
+31 31 2116400,
vgd_panchina_newsletter_january.pdf (462.26Kb)
