Under the payroll tax regime, there is a specific exemption for allowances and benefits in kind relating to health and safety provisions for employees. This exemption was tightened with effect from 1 January 2022.
Direct link
With effect from 1 January 2022, a health and safety provision will only be specifically exempt if it is directly related to the obligations arising under the Working Conditions Act (Health and Safety at Work Act) rest with the employer. The previous condition was broader: health and safety measures had to stem from the employer’s working conditions policy. The working conditions policy may cover more than what the employer is obliged to provide under the Health and Safety at Work Act.
Mandatory health and safety measures
Article 3 of the Working Conditions Act sets out which health and safety measures are mandatory: “The employer shall ensure the health and safety of employees in all aspects relating to their work and, to that end, shall implement a policy aimed at providing the best possible working conditions …”. The specific exemption from payroll tax therefore does not apply, amongst other things, to provisions designed to promote the general health of employees.
Personal contribution
The stricter rule refers to Section 44 of the Working Conditions Act, which stipulates that all costs relating to compulsory health and safety provisions are to be borne by the employer. The specific exemption from payroll tax therefore applies only where there is no personal contribution towards health and safety provisions made available to employees. Where the health and safety provision is exchanged for gross pay (in cash or in hours), this also constitutes a personal contribution, meaning that the health and safety provision does not fall under the targeted exemption.
Not a luxury
Any additional costs associated with a more luxurious, more expensive version of the health and safety provision are not covered by the specific exemption. Examples include: designer frames for computer glasses and a more expensive fabric on an office chair. The employee may, however, make a personal contribution towards these additional costs. The employer may allocate these additional costs to the discretionary allowance under the work-related expenses scheme.
Giving up smoking/Chair massage
With the tightening of the rules, the commitments under which a stop-smoking course and a chair massage were covered by the targeted exemption for health and safety provisions have also been withdrawn. Since 2020, the stop-smoking course has been reimbursed under the basic health insurance package (without a personal contribution). From 2022, a tax-free chair massage will only be possible if it is provided at the employee’s workplace (in which case the zero valuation for workplace facilities applies). A chair massage provided outside the workplace may be designated by the employer for the ‘free space’ under the work-related expenses scheme.