A private limited company has been issued with a supplementary assessment for payroll taxes, including tax interest and a late payment penalty, covering the years 2018 to 2020. The tax inspector has adjusted the costs for personal training and gym memberships incurred by the director and his spouse. The director-major shareholder believes that these costs fall under the specific exemption for health and safety provisions. By covering these costs, the employer is ensuring the health of its employees, which is a legal obligation.
The Working Conditions Act and the relationship between employer and employee
The director and majority shareholder is the director and sole shareholder of the private limited company, as well as its sole employee. The private limited company holds a 51% interest in another private limited company, where the director-majority-shareholder’s spouse is employed. The tax inspector argues that the director-majority-shareholder is self-employed and that the Working Conditions Act (Arbowet) does not apply. However, the court ruled that there is indeed a relationship of authority between the private limited company and the director and sole shareholder, meaning that the Working Conditions Act does apply. It is irrelevant whether, in substance, a relationship of authority exists.
Targeted exemption and partner
The private limited company argues that the costs of personal training and the director-shareholder’s gym membership fall under the specific exemption for health and safety provisions. The court agrees with this view. In doing so, it points out that, since the amendment to the law, the ‘direct link’ criterion is no longer part of the exemption for health and safety facilities. In the circumstances of this case, the director-major shareholder’s costs may therefore fall within the scope of the specific exemption. However, the costs incurred by the director-major shareholder’s partner are not covered by this exemption, as she is not an employee of the private limited company.
Workplace
The inspector also disputes that the facilities at the workplace have been used. The court finds that health and safety facilities may also fall under the specific exemption when used outside the workplace. Furthermore, the inspector’s position regarding the customary practice test does not hold water, as he has failed to substantiate it sufficiently with data.
Legislative amendment from 2022
This ruling relates to the years 2018 to 2020 inclusive. As of 2022, the targeted exemption for health and safety facilities has been tightened. Until then, the exemption applied to facilities that arose directly from the employer’s health and safety policy. From 2022, the exemption will only apply to facilities directly linked to an employer’s obligation under the Working Conditions Act. This raises the question of whether the costs of a gym membership and personal training will still be covered by the specific exemption after 2021.