Let us try to explain the WKR to you
Let’s dissect the terminology first. The WKR is the abbreviation for work-related costs scheme (the ‘Werkkostenregeling’ in Dutch). The work-related costs scheme enables employers to spend part of their total taxable wage on any kind of benefits, provisions, and certain reimbursements, without tax liability. Of course, it brings along a couple of rules. The government has decided which expenses fall under the regulation, but also to what amount the costs are untaxed.
What is the Discretionary scope & how can you calculate it
The untaxed ‘space’ in which certain costs remain untaxed, is called the discretionary scope, also known as the ‘free space’ (vrije ruimte). The size of that space (and so the untaxed budget) depends on the size of the wage bill of a company. As of January 2023, a company may spend a maximum of 3% of the taxable wage bill up to €400,000.
For some companies, the wage bill is more than €400.000. In that case, 1.18% of the remainder of the wage bill that falls above that €400.000 is added up to the discretionary scope. See the table below for a number of example calculations. (Please note: The 3% is a temporary raise. In January 2024 it will go back to 1,92%.)
|100000 x 0,03
|200000 x 0,03
|300000 x 0,03
|400000 x 0,03 <br/> 50000 x 0,0118
What role does the WKR play when it comes to benefits (and why should you know about it)
The WKR plays a significant role when it comes to benefits, as the WKR enables employers with an untaxed budget to provide certain benefits. Of course, there are a number of rules on what it can be spent on, and whatnot, but there are also certain costs that are untaxed yet don’t take any space of the discretionary scope. More on that later.
What can the WKR be used for?
As an employer, you’re free to spend your WKR budget on benefits, reimbursements, and provisions for your employees. There are the tried-and-true ski trips, work ‘borrels’, and Christmas package, but there’s much more on which the WKR can be used, including things that employees benefit from during their free time as well:
- Gym memberships at gyms or yoga studios;
- Coaching with a focus on personal development or wellbeing;
- Access to coworking spaces;
- Child daycare
- Budget to spend in the YourCampus app marketplace.
What is not WKR eligible?
Not all costs that employees spend on their employees will take up the ‘free space’ of the WKR. Actually, there are more classifications for untaxed costs: Zero evaluations, Specific exemptions, and Intermediary costs.
The Tax and Customs Administration (Belastingdienst) decided that provisions that are strictly used at the workplace should not impact the WKR. These provisions can have a zero evaluation (they receive a ‘nihil waardering’). Any form of salary is also excluded from this rule. The following are a couple of examples of costs that are valued at zero:
- Consumptions at the workplace that are not part of a meal, such as tea, coffee or soup;
- Work clothing;
- OV-subscriptions for commuting
The costs that have not been specifically exempted, or which has been evaluated as zero, impact the free space. As mentioned earlier, the free space (or discretionary scope) is the untaxed amount that a company can spend on its employees. The free space is calculated based on a percentage of the wage bill. Hence, it’s important to check what costs fall under which categories, as they may (or may not) impact the taxfree budget.
Specific exemptions and intermediary costs
- Specific exemptions: there are specific exemptions which can be reimbursed tax-free but don’t impact the discretionary scope. Those include travel allowances, reimbursement for WFH costs and costs for a certificate of good conduct (VOG).
- Intermediary costs are costs that an employee incurs for its job or employer, such as a business lunch. Those can be reimbursed tax free, as they’re not seen as salary. In addition, these kinds of costs will also not influence the discretionary scope in any way.
What to look out for: the 80% ‘fine’
As said before, a company can spend a maximum of 3% of the taxable wage bill up to €400,000. For the remainder of the wage bill that falls above that €400.000, it’s 1.18% that can be added to the discretionary scope.
Any amount that is spent on benefits, reimbursements, and provisions and indicated as such, but exceeds the discretionary scope, is subject to an 80% fine. This fine is called ‘the final levy’. Make sure to keep track of your WKR budget and not overspend, as that can be a costly mistake.