With a good two months still to go in 2018, you, as an employer, still have plenty of time to check whether your discretionary allowance will be used to its full potential this year. Naturally, VWGNijhof would be happy to assist you with this check. We can help tailor the structure of your administration to the annual WKR check.
Free space
Your tax-free allowance amounts to 1.2% of the total taxable wage bill you pay in 2018. Up to this amount, as an employer, you may pay tax-free allowances to your employees and/or provide them with benefits in kind.
If the total of the allowances and benefits in kind included in your tax-free allowance exceeds 1.2% of your total payroll, you will pay income tax on the excess amount. You are responsible for paying this income tax. Your employees will not be affected by this (final levy). The rate is 80%.
Making the most of your tax-free allowance naturally means that the total value of allowances and benefits in kind paid to your employees is close to 1.2% of your total wage bill. This allows you to make the most of the opportunities to reward your employees tax-free. If you anticipate having unused allowance remaining, you still have two months in which to make (additional) tax-free allowances or benefits in kind.
If you exceed the maximum amount of your tax-free allowance, optimisation involves looking into ways of reducing the allowances and/or benefits in kind that are subject to tax.
Directed exemption
Allowances and benefits in kind that fall under a specific exemption are tax-free without reducing the tax-free allowance. By ensuring that as many allowances and benefits in kind as possible fall under the specific exemptions, you retain more of your tax-free allowance.
Another way to retain free space is to value benefits in kind at zero. The salary component then counts towards the free space, but at a value of zero. In addition, payroll tax provides for a number of flat-rate valuations. These are usually (much) lower than the actual costs of the benefit in kind.
€ 2.400
Bonuses (and similar payments) may be included in the discretionary allowance. This is only permitted if the payment of these amounts is not significantly (30% or more) out of the ordinary. The Tax and Customs Administration does not regard up to €2,400 of such payments per year as unusual. This is a simple way to utilise any unused ‘free space’.