Due to the coronavirus crisis, the allowance under the work-related expenses scheme (WKR) has been significantly increased. You have until the end of the year to make the most of this additional allowance.
Free space
In 2020, the WKR’s discretionary allowance amounts to 3% (instead of 1.7%) on the first €400,000 of the taxable wage bill. Above €400,000 of the taxable wage bill, the allowance is 1.2%. For a taxable wage bill of (for example) €750,000, the allowance is calculated as follows:
| 3% * € 400.000 = | € 12.000 |
| 1,2% * € 350.000 = | € 4.200 |
| Total | € 16.200 |
Up to the amount of the tax-free allowance, employers may provide their employees with tax-free allowances and benefits in kind. However, this is subject to the condition that the allowance or benefit in kind is not significantly (30% or more) out of the ordinary.
Make use of
Almost every year, we urge employers to review, after the holiday period, whether the discretionary allowance is being used to its full potential. This is particularly relevant for 2020. Not only because of the additional discretionary allowance created in response to the coronavirus crisis, but also because, as a result of that crisis, many employers have not provided all the allowances and benefits in kind that they would normally provide.
The additional allowance can be used in many ways. The further increase in 2020 (from 1.7% to 3%) is intended, amongst other things, to provide scope for allowances or benefits in kind made necessary by the coronavirus crisis. For example, employees who are forced to work from home could be given an (additional) allowance to cover the costs of working from home.
Not all allowances and benefits in kind paid to employees need to be included within the discretionary allowance to be tax-free. After all, many allowances and benefits in kind are already tax-free because they are subject to a specific exemption or are deemed to have a zero value.
Step-by-step guide
- Determine the size of your free space.
- Check which allowances and benefits in kind have so far been designated for the discretionary allowance.
- Check which allowances and benefits in kind you expect to allocate to the discretionary allowance in the near future.
- Estimate how much spare capacity is expected to remain unused in 2020.
- Identify the possibilities for utilising this space.
- Please make these payments or provide these benefits by 31 December 2020 at the latest.