An employer who reimburses expenses specifically exempted to employees must properly substantiate. The Court of Zeeland-West Brabant ruled that a Portuguese temporary employment agency did not sufficiently substantiate the allowances paid to employees for extraterritorial costs. Indeed, the evidence must be properly focused on the concrete situation of the employees concerned.
Rule of evidence
The rule of evidence stems from the system of wage tax. Indeed, the main rule is that wages = all that is enjoyed from employment. And to this the legislator has added for certainty: “Including that which is reimbursed or provided in the course of employment.”.
But where there is a main rule, there are of course exceptions. Besides the free space of the work expense scheme, these are the targeted exemptions. One of these targeted exemptions concerns extraterritorial expenses. Here, the 30% scheme is often the first to come to mind, but the Portuguese employment agency could not apply it.
Extraterritorial costs
Extraterritorial costs are the extra costs incurred by an employee due to temporary residence in a country other than the country of origin in connection with the performance of work. The Portuguese employer paid the employees working in the Netherlands allowances for extra costs for food and drinks, clothing and personal care.
The employer substantiated these allowances with its own cost-of-living survey, price index figures and Eurostat, and a report in which Dialogic evaluated the 30% scheme. The Court decides that in doing so, the employer does not meet the burden of proof required of it. The employer has to prove that the allowances given to employees relate to the costs actually incurred by those employees and that the amount of those allowances is not excessive. The employer may not suffice to substantiate on the basis of general averages and model assumptions, which do not relate to the specific situation of the employees.