From 1 January 2015, the working expenses scheme will apply to every employer. It will then be over and done with the ‘old’ system of free allowances and allowances in payroll tax. If your employees can now buy products from your own company with a discount or allowance, there is good news. This employee discount will remain, albeit with a small restriction.
Staff discounts for industry-specific products
Many companies give their staff the opportunity to purchase products from their own company at a discount. This is particularly common in the clothing sector. A staff discount has applied to this for years. Under the ‘old’ system of tax-free allowances and benefits in kind, a discount or allowance when purchasing products from the company's own premises is untaxed under the following conditions:
- The products are not industry specific.
- The discount or allowance per product shall not exceed 20% of the fair market value of that product (including VAT).
- There is a maximum discount or allowance of €500 per employee per year. This maximum exemption of €500 may be increased by the exemption amount not yet used in the previous two calendar years.
Staff discount next year
You will also find the staff discount for industry-specific products in the work-related costs scheme from 2015, in the form of a targeted exemption. The above conditions remain in place. However, carrying forward to subsequent calendar years an unused part of the discount is no longer possible. Thus, a part of the €500 exemption amount not used in 2015 cannot be carried forward to 2016 and 2017.
Note!
If you are currently using the employee discount under the ‘old’ system, bear in mind that any unused part of the exemption in 2014 cannot be carried forward to 2015.
The scheme described above is part of the 2015 Tax Plan Bill, which is currently being debated in the House of Representatives. At the moment, therefore, it is not certain whether the scheme will be introduced, as you read above.