During the debate in Parliament on the legislative proposals relating to the 2016 tax plans, the voluntary scheme was once again discussed, as it is almost every year. However, this has not yet led to any changes to the scheme.
The vital importance of volunteers to our society is widely recognised. For an overview of the problems faced by volunteers and their organisations, see, amongst other things, the policy paper by CDA MP Bruins Slot entitled Volunteers are champions
Volunteer scheme
We come across the volunteer scheme in the following two areas.
– For the wage tax The question is whether remuneration paid to a volunteer constitutes taxable earnings.
– As part of the social assistance A volunteer’s allowance may be regarded as earnings to be deducted from benefits.
The rules applicable to both areas are not entirely the same. Unfortunately, the State Secretary for Finance sees no reason to harmonise the rules.
Unpaid work
The essence of volunteering is that unpaid work . If the volunteer does not receive any remuneration, it goes without saying that no income tax will be deducted and no reduction will be made to their social security benefits.
But surely the volunteer is entitled to be reimbursed for the costs incurred in connection with their voluntary work? Absolutely, but as soon as costs are reimbursed (or provided in kind), the tax inspector (for income tax) and the social services officer (for social security benefits) will be looking over the shoulders of both the organisation and the volunteer. Only if the reimbursement covers exclusively the actual costs directly related to the volunteer’s work can income tax be waived and the social assistance benefit not be reduced.
For the purposes of payroll tax, reimbursement of actual costs only applies where the volunteer works for an organisation that:
– is not subject to or is exempt from corporation tax, or;
– is an ANBI, or;
– is a sports club or foundation;
and the total The total of the allowances (in cash) and benefits in kind paid to the volunteer must not exceed:
– €4.50 per hour (for volunteers under the age of 23: €2.50 per hour) and;
– €150 per calendar month and;
– €1,500 per calendar year.
Nor did the proposal from Parliament to raise the maximum amount under the volunteer scheme to €2,500 per year find favour with the State Secretary. Furthermore, in the aforementioned policy paper, Bruins Slot proposes raising the “hourly rate” to €5.30.
The following threshold amounts apply in the context of social assistance:
– €95 per calendar month and;
– €794 per calendar year.
The volunteer must always notify the local authority that they are carrying out voluntary work. If the local authority considers the voluntary work to be necessary for the reintegration of the person receiving social assistance, higher threshold amounts may apply. The interpretation of the term “volunteer” is largely left to the local authority as the body responsible for administering social assistance.
Volunteers who receive benefits other than social security benefits would be well advised to check in advance whether their voluntary work might cause any complications with regard to those benefits.
Christmas hamper
Of course, volunteers often receive a Christmas hamper or some other gift. However, if this causes the threshold amounts mentioned above to be exceeded, it can prove costly. As indicated, the total of all allowances and benefits in kind must be taken into account when determining the threshold amounts. A volunteer who receives €150 per month for 10 months, as well as a Christmas hamper, therefore exceeds the threshold amounts.
Exceeding the thresholds does not automatically mean that income tax is payable. If the volunteer can demonstrate that the remuneration received was actually used to cover genuine costs associated with the voluntary work, no income tax is payable. However, meeting this burden of proof is often no easy task in practice.