At present, employers have a budget of 1.2% (2019) of the total salary bill for tax purposes that may be used to provide employees with tax-free allowances and reimbursements by assigning these costs to the budget as final levy wages. Employers must pay a final tax levy of 80% on the amount paid in excess of the budget for allowances and reimbursements. In addition to the budget certain allowances and reimbursements are exempt (“specific exemptions”) from the budget and can be provided tax free. There are also allowances and reimbursements that are valued at nil (“nil valuation”), resulting in no reduction of the budget.
The following two measures regarding the WCR have been proposed:
- Adjusted budget
Employers will have a budget of 1.7% of the first EUR 400,000 of the total salary bill for tax purposes. For the amount above EUR 400,000 the percentage of 1.2% remains. Considering that the change applies to the first EUR 400,000, especially smaller companies and thus SME will benefit the most of this measure.
- Declaration on behavior
Currently the reimbursement of costs for a statement about behavior (in Dutch: Verklaring omtrent gedrag (“VOG”) has to be assigned to the budget of the WCR. As a VOG is often legally required and does not lead to a benefit for the employee, employers do not deem it fair that this has to be assigned to the budget. As from 2020 the VOG will no longer have to be assigned to the budget, as from then the VOG will be considered as a specific exemption.
If you have any questions regarding the WCR and/or the application of thereof in your organization, feel free to contact us.