Well, that’s not exactly easy. This is evident from a recent conclusion from the Advocate General (AG) at the Supreme Court. The AG advises the Supreme Court, which may decide to depart from this advice.
Amsterdam Court of Appeal
This case concerns the appeal in cassation against the judgment of the Amsterdam Court of Appeal, which we discussed in our article Bonuses (shares) not covered by the WKR. In this article, we also explain the advantage of taxing bonuses – whether or not in the form of shares – under the final levy (80%) of the work-related expenses allowance.
The Amsterdam Court of Appeal held that classifying such benefits as such is unusual.
Explaining customary practice in limited terms
As mentioned, the Advocate General is not entirely sure. He does, however, consider it clear that the ‘customary practice’ criterion must be interpreted restrictively.
He also believes that this should be compared with the remuneration and benefits provided to employees who are in a comparable situation in terms of their role, qualifications and experience. But how many other employers should this involve? Should they be employers in the same sector or industry?
It also appears that the necessary comparative data is not available. Naturally, the employer in question does not have it. But it seems that the Tax and Customs Administration does not have it either (yet?).
Once it has been determined what the basis for comparison should be, the Advocate General states that it is customary to use the amount specified in 90% of those cases for the work-related expenses allowance. We are curious to see whether the Supreme Court will adopt this percentage.
Burden of proof
It is highly likely that this case will ultimately be decided on the basis of the allocation of the burden of proof. This burden rests, to a large extent, with the Tax and Customs Administration, which must demonstrate that the allowance or benefit in kind is unusual. The Advocate General is, quite rightly, of the opinion that the Tax and Customs Administration cannot simply rely on the assertion that all allowances and benefits in kind exceeding €2,400 are unusual.
We are looking forward to the Supreme Court’s judgement with great interest.