The AWN reports that employers are keen to start making their employment conditions more environmentally friendly, but are hampered by tax regulations and high costs.
Tax regulations
In itself, the tax legislation in this area seems clear to us: there are no tax rules relating to the greening of employment conditions. Anything the employer does in this regard will therefore, in principle, result in a benefit subject to payroll tax.
The existing tax rules can only be utilised to a limited extent in the context of this green transition. The AWN states that, in the context of making employment conditions more sustainable, employers’ focus is currently primarily on mobility: (electric) bicycles, electric (lease) cars and encouraging working from home. In addition, employers are encouraging the purchase of home-working furniture. These are precisely the areas for which tax rules already exist.
High costs
It would appear that the other problem that has been highlighted – higher costs – stems in part directly from this. The absence of tax rules – in the form of exemptions or low valuations of wage components – means that costs are increased by the amount of payroll tax payable.
An employer who, as part of efforts to promote sustainability, wishes, for example, to contribute €1,000 towards the cost of solar panels that an employee is having installed on their own home must pay €980 in payroll tax (based on the highest rate without tax credits). The total cost to the employer will then be €1,980. If this employer designates this salary component for the ‘free space’ under the work-related expenses scheme and the maximum for that space is exceeded, the employer will owe 80% * €1,000 = €800 in payroll tax, bringing the total cost to the employer to €1,800.
Lobby
From the perspective of payroll tax, it is not illogical for an employee to pay for a private investment – for example, in solar panels for their own home – out of their net pay (pay that has been subject to payroll tax). The question of whether income tax relief should be introduced for this purpose is a political one. On the one hand, it concerns whether income tax relief is an effective way of promoting sustainability. On the other hand, there is the budgetary consideration, as any income tax relief measure costs the taxpayer money.