The Working Costs Regulation (WKR) is a tax scheme that helps employers in the Netherlands to optimise the tax efficiency of allowances and benefits in kind given to employees. In 2024 it will allow employers to give untaxed allowances and benefits in kind, such as travel expenses, and make certain things tax-efficient. The system is designed to reduce the administrative burden on employers while providing transparency on the tax benefits employees receive. It makes it easier to administer allowances and benefits in kind, leading to a more efficient use of resources within companies. Before 2024, there are specific rules and adjustments that companies must follow to make the best use of the WKR.
Origins and development
The Working Expense Scheme was introduced on 1 January 2011 by the Dutch tax authorities as a replacement for the old allowance and benefits in kind scheme. The idea behind the WKR was to provide a simpler and more flexible scheme that would help employers manage allowances and benefits in kind. Previously, there was a lot of red tape due to various regulations and exceptions. With the WKR, the government wanted to reduce this administrative burden and simplify the rules. Competitors of the WKR are the traditional reimbursement schemes that companies used to use. Tax consultancies and specialised software suppliers are the main organisations helping companies implement and manage the WKR.
How the Expense Allowance Scheme Works
The Working Cost Scheme works by making an annual flat tax amount, the ‘free allowance’, available for untaxed allowances and benefits in kind. This amount is 1.7% of employees’ total taxable wages. Employers can give allowances within this free margin without having to pay tax. Reimbursements exceeding this amount are taxed with a final levy of 80%. The possibilities within the WKR are diverse. For example, employers can give tax-free reimbursement of travel expenses, telephone costs or certain gifts. In addition, the WKR offers scope for providing, for example, training budgets and homeworking expenses without any additional tax burden for employees. This flexible scheme allows companies to reward and support their employees in an attractive way, while staying within the tax rules.
Apply in your Organisation
Applying the Working Costs Regulation (WKR) in your organisation starts with a good understanding of the rules and detailed administration. First, you need to calculate the taxable wage bill of your employees, as this forms the basis for the free room you have. Make sure you keep clear records of all the allowances and benefits in kind you offer. It is important to properly document and check the expenses you place in the free space, so that you do not accidentally exceed the exempt limit. Keeping accurate records avoids surprises in tax returns and prevents you from having to pay tax unduly. You can use software or consultancy services specifically designed to help companies implement and manage the WKR. This ensures that you work efficiently and in compliance with the legislation.
Practical Implications
The possibilities offered by the WKR have several practical implications for your organisation. Firstly, by providing untaxed allowances, employees can, for example, be reimbursed for their travel expenses, work-related phone costs or training without a tax burden. This can increase your employees’ satisfaction and motivation. However, if you exceed the free allowance, you have to tax the extra costs with a final levy of 80%, which can have significant financial consequences. In addition, the WKR can also affect your budgeting, as you may have to reallocate expenses to make optimal use of the free space. It is crucial to regularly review and adjust your expenses and allowances to the applicable WKR rules to avoid surprises.
Laws and regulations
The laws and regulations concerning the Work-related Costs Scheme are laid down in Dutch tax legislation. The WKR falls under the Payroll Tax Act 1964, which lays down specific rules and percentages for tax-free allowances and benefits in kind. Important regulations concern the amount of the free allowance, which can be adjusted annually by the tax authorities. There are also rules on what can and cannot be considered a reimbursement or allowance and how they should be correctly recorded. It is also important to keep abreast of any changes in legislation. As the tax authorities may make periodic updates and adjustments. For up-to-date information and detailed guidelines, consult the tax authorities or engage tax advisers. This will ensure that you always adhere to the latest regulations and avoid problems with tax returns.
Recent Developments
The Working Costs Regulation (WKR) has recently undergone some significant developments. In 2024, for example, there will be a change in the amount of the free allowance. The tax authorities have announced that the percentage that companies can compensate tax-free will be adjusted again. These changes are intended to support companies in their financial policies while ensuring a fair tax burden. There are also new guidelines on how companies should record and report certain allowances and benefits in kind. These updates affect how companies should keep records and how they can optimise their allowances. It is important to keep an eye on these changes and understand how they may affect your specific situation. Regularly checking tax updates and advisory services can help you stay abreast of the latest rules and ensure that you are in compliance with current legislation.
Points to watch out for with the WKR
When applying the Expense Allowance Scheme, you need to pay attention to several things to avoid problems. First of all, it is essential to accurately calculate the taxable wage bill of your employees. This forms the basis for your free allowance. Also, keep careful records of the allowances and benefits in kind you provide, and make sure you do not exceed the free margin. Unjustified expenses can lead to a high final levy of 80%. Which can have significant financial consequences. You also need to keep abreast of changes in legislation and tax rules that may affect your organisation. Regular audits of your records and advice from tax professionals can help ensure compliance and avoid tax return surprises. It is also useful to keep your employees well informed about the allowances and benefits they may receive so that they are also aware of their tax benefits.
TriFact365’s role in Declarations
TriFact365 plays a valuable role in managing expense claims required for the Working Costs Regulation (WKR). This platform offers a user-friendly solution for recording and managing business expenses, declarations or travel costs. With TriFact365, you can easily submit expense claims. The platform helps you automate administration, saving time and reducing the risk of errors. Using TriFact365 helps you gain insight into your expenses. Allowing you to react quickly to any excesses of the free allowance. This makes it easier to comply with tax regulations and make the most of tax benefits. While minimising your administrative burden.
