Under the volunteer scheme, a volunteer may receive a maximum of per year € 1.500 received (and up to € 150 per month).
Greenhouse base
Zeeland-West Brabant District Court has ruled in a recently published judgement that this must be assessed on a cash basis. The volunteer in question received a total of €1,534 in 2013. Of this amount, €1,298 related to 2013 and €236 to 2012.
The Tax and Customs Administration levied tax in 2013 € 1.298 This is recorded as income from other activities for the volunteer. The volunteer pays income tax, National Insurance contributions and the income-related contribution under the Health Insurance Act on this amount.
The Court ruled that this was correct, as the total remuneration received in 2013 was €1,534 higher than the €1,500 maximum under the volunteer scheme. The decisive factor is the total amount that the volunteer actually received in 2013 (cash basis).
Treasurers would therefore be well advised to ensure that the actual payments made to volunteers never exceed the maximum amounts set out in the volunteer scheme. In doing so, pay attention not only to the annual amount (€1,500), but also to the monthly amount (€150).
Invoicing system
Why isn’t €1,534 taxed as income from other activities in the volunteer’s case? After all, that is the total amount she received in 2013.
The provisions relating to trading profits apply when determining the profit from other activities. The general rule is that income is allocated to the year to which it relates (invoice basis). The portion of the remuneration relating to 2012 (€236) should therefore have been taxed in 2012, not in 2013.
Incidentally, the volunteer was permitted to deduct expenses amounting to €90. After all, the deduction of expenses actually incurred in generating the income is also part of determining the profit from the business. Naturally, the volunteer must demonstrate that the expenses are business-related and reasonable in amount. In this case, the Court considered the sum of €90 to be reasonable for printing and car expenses incurred.
Volunteer scheme
You can find the volunteer scheme in the payroll tax regulations. We describe the conditions of this scheme, amongst other things, in our article Volunteer scheme remains (rightly) a hot topic.
Allowances paid under the voluntary work scheme are deemed to be tax-free expense allowances. In the case described above, the Tax and Customs Administration could also have approached the payer of the allowances. In that instance, additional income tax could have been levied (at the grossed-up rate and increased by a penalty). In this case, however, the payer was spared this.
The maximum amounts under the volunteer allowance scheme must take into account all benefits in kind and allowances paid to the volunteer. A volunteer who receives €125 every month and a Christmas hamper worth €35 in December exceeds the maximum amounts under the volunteer allowance scheme. This is because this volunteer receives 12 * €125 = €1,500 + €35 = €1,535. And that is more than €1,500.