The working expenses scheme, WKR in 2025, is an important part of Dutch tax legislation, especially for employers. It allows them to provide tax-free allowances and benefits in kind to their employees, as long as they stay within the set free allowance.
Changes can be made to the WKR every year, and changes have also been announced for 2025. In this blog, we discuss what the WKR entails, the changes for 2025 and what this means for you as an employer or employee.
The WKR gives employers scope to give certain allowances and benefits in kind, such as Christmas hampers, company outings or tools, to their employees tax-free. This is done through the free room, which is calculated as a percentage of the company’s wage bill.
Whatever exceeds the free allowance is taxed with a final levy of 80%, making it important to handle this scheme properly.
What will change in 2025?
For 2025, the government has made some changes to better align the WKR with the current economic situation and to ease administrative burdens. Below are the main changes:
1. Adjustment of free space
From 2025, the percentage of free space will be changed:
- For the first €400,000 of the wage bill, the rate remains 1.92%.
- For the amount above €400,000, the rate drops from 1.18% to 1.12%.
This reduction means that larger employers in particular have less tax-free room for allowances and benefits in kind.
2. Widening targeted exempted transport
From 2025, the tax-free mileage rate for business kilometres will be increased to €0.23 per kilometre. This applies not only to travel allowances, but also to work-related transport such as public transport.
3. Specific exemptions simplified
There is a plan to simplify specific exemptions, such as reimbursement of professional literature and training costs. This should reduce the administrative burden on employers.
4. Focus on sustainable working conditions
The government encourages sustainable working conditions. Allowances for items such as a company bicycle or a home office continue to fall under the targeted exemptions. This allows employers to support employees in flexible working and sustainable travel.
5. Extension of usability test
The usability test, which determines whether a reimbursement or provision fits within the WKR, will be tightened slightly. This means that employers must look more carefully at what they offer as tax-free allowances.
What does this mean for employers?
The changes call for a review of policies around allowances and benefits in kind. Here are some tips:
- Plan: Decide how you want to use the free space in 2025. Focus on what employees really value, such as training opportunities or homeworking facilities.
- Take into account the lower rate: For companies with a higher wage bill, the drop to 1.12% means a restriction. Analyse which allowances you may be able to review.
- Make your policies sustainable: With an emphasis on sustainable working conditions, you can adapt your benefits to the current zeitgeist. Consider a cycling plan or facilitating hybrid working.
What does this mean for workers?
Employees may find that certain benefits or provisions change. For example:
- Less room for perks: Larger employers may have fewer tax-free provisions, such as bonuses or gifts.
- More focus on sustainability: Allowances for things like commuting and working from home remain attractive and are likely to be offered more often.
Conclusion
The WKR remains a flexible tool for employers, but the changes in 2025 require good preparation. By making smart use of the free space and targeted exempted allowances, employers can not only operate in a fiscally advantageous way, but also keep employees happy. For employees, it is important to keep abreast of their employer’s options.
