Over the last five years, more people have started working from home. Statistics Netherlands (CBS) reports that the number of people working from home has increased by 300,000. It would therefore seem that the ‘new way of working’ – working wherever and whenever you want – is catching on.
Working from home is covered by the Working Conditions Act
Even when an employee works from home, the rules set out in the Working Conditions Act apply. However, the rules for working from home are somewhat more flexible than those for the workplace at the employer’s premises. Working from home must form part of the employer’s risk assessment and evaluation. The employer and employee must make clear arrangements, preferably in writing, regarding working from home. The home workplace must consist, as a minimum, of a good chair, a table and appropriate lighting. For work involving the use of a computer screen at home, the same health and safety rules apply as for a workplace in an office.
Working from home and income tax
Wages comprise everything derived from the employment relationship. This therefore also includes any benefits that the employer pays or provides in connection with the employee’s working from home. There are no specific rules under payroll tax legislation regarding the reimbursement or provision of items used by employees working from home.
Of course, there is the work-related expenses allowance. Up to 1.2% of the total wage bill, the employer may designate wage components that can be provided free of payroll tax. And if the work-related expenses allowance is exceeded, the employer pays payroll tax at the final levy rate of 80%. However, if, as an employer, you structure the allowances and benefits in kind relating to working from home correctly, it is unlikely that you will need to rely on the work-related expenses allowance.
As far as health and safety provisions are concerned, the reimbursement or provision of such provisions outside the work-related expenses allowance is exempt from payroll tax. The reimbursement or provision must, however, stem from the employer’s health and safety policy. Since 1 January 2015, the exemption has applied to work-related facilities outside the employee’s workplace.
This is because, for the purposes of payroll tax, a location within the employee’s home is explicitly NOT classified as a workplace. Consequently, the zero-valuation rules linked to the workplace do not apply to the home workplace. For example, the cup of coffee or tea that an employee drinks at work is exempt from payroll tax. However, on days when the employee works from home, the employer cannot provide tax-free coffee or tea.
As an employer, you may reimburse or provide a mobile phone, laptop or tablet required for working from home on a tax-free basis. The condition is that such equipment is necessary for the performance of the employment contract. Furthermore, the employee must return the equipment or reimburse its cost upon termination of the employment contract. The necessity criterion may also be applied to tools. The same applies to the costs of data transmission (internet subscription) and software necessary for the performance of the employment contract.
Working from home outside the Netherlands
Working from home whilst living abroad raises an issue regarding compulsory insurance. The basic principle is that an employee is covered by the statutory social security schemes in the country in which they work. This is usually the country where the employer is based.
However, if the employee works 25% or more in the country in which they live, they are insured in their country of residence. If your employee lives in Germany and works from home for 2 out of 5 days, they are insured in Germany, not in the Netherlands. The contributions must then be paid in Germany. The Supreme Court confirmed this not so long ago.