Under the tax plans for 2020, the allowance under the work-related expenses scheme (WKR) will be increased from 1.2% to 1.7% of the total wage bill. This increase applies only to the first €400,000 of the total wage bill. Above that amount, the allowance remains limited to 1.2%.
Group scheme
Groups of companies may choose to be classified as a group for the purposes of the WKR. They may make this choice anew each year during the month in which the WKR is settled. All companies that meet the criteria will then form part of the “WKR group”.
The advantage of the group scheme is that the tax allowance of all companies belonging to the group is pooled. Any tax allowance not utilised by group companies is thus utilised by companies that exceed their tax allowance.
From 2020 onwards, the disadvantage of applying the group scheme is that the €400,000 threshold can only be utilised once. The NOB has suggested that this benefit should be extended to the group scheme, but the State Secretary does not agree with this.
No extras
In the Note following the report In the draft Tax Plan 2020 bill, State Secretary Snel notes that employers have expressed a wide range of wishes regarding the expansion of the options for providing employees with tax-free allowances or benefits in kind. None of these requests will be met. The reason is that there is no budgetary provision for this.
Among the requests made is the exemption of celebrations and parties held at external venues. The invoice value of such events forms part of the employees’ wages, but, of course, under the WKR, employers almost always designate this benefit as a component subject to final withholding tax. For the purposes of payroll tax, a significantly lower value is attributed to a party held at the workplace.
Other requests that have not been met include: the extension of the scheme for staff anniversaries, the reintroduction of the standard interest rate for staff loans, and the exemption of the Christmas hamper from tax.
Rate
Nor is there any scope to reduce the final levy rate. The amount by which the total of designated allowances and benefits in kind exceeds the tax-free allowance is currently taxed at a final levy rate of 80%. The NOB has proposed reducing this to 76,15%. The rationale behind this is that it would bring the rate into line with the reduction in the top rate (from 51.75% in 2019 to 49.5% in 2020).
However, according to State Secretary Snel, there is no link between the grossed-up top rate and the final levy rate under the work-related expenses scheme. The new top rate of 49.5% corresponds to a grossed-up rate of approximately 98%. This is still significantly higher than the final levy rate of 80%.
Optimise
Incidentally, research shows that many employers are (far) from making optimal use of their discretionary allowance under the WKR. The same applies to the (targeted) exemptions and lower valuations. VWG would be happy to work with you to explore how you can make the most of all the options available under the payroll tax scheme.