A report recently appeared in the press stating that (sports) administrators generally lack sufficient knowledge of the laws and regulations affecting their clubs. This is hardly surprising, given the many, often complex rules we have in the Netherlands. VWGNijhof has an extensive note which covers all tax-related aspects concerning (sports) clubs. One such issue concerns the deduction of income tax from volunteers. Below is a brief overview of the tax scheme for volunteers.
Maximum reimbursements
The limits of €150 per month and €1,500 per year are well known. What is less well known is that the volunteer exclusively is entitled to receive this payment, and that this relates to the total value of all allowances and benefits in kind received by the volunteer. Consequently, allowances and benefits in kind that “genuine” employees may receive tax-free are also taken into account for the volunteer when assessing the aforementioned limits. For example, a volunteer who receives a monthly allowance of €150 for 10 months and, at the end of the year, a Christmas hamper worth €70, exceeds the €1,500 limit with the Christmas hamper.
Incidentally, exceeding the limits described above (€150/€1,500) does not automatically mean that the amount received by the volunteer is subject to income tax. After all, there is no taxable remuneration as long as the allowance received does not exceed the actual costs reasonably incurred by the volunteer. However, the burden of proof in this regard rests with the (potential) withholding agent. They can fulfil this obligation, for example, by requiring the volunteer to submit a documented claim for expenses (with receipts). These administrative procedures are then the price to be paid for not applying the threshold amounts.
Volunteer
A volunteer is a person who does not carry out work as a profession for a:
- the public benefit organisation (ANBI);
- sports organisation;
- any other organisation that is not subject to or exempt from corporation tax (including the Social Welfare Organisation; SBBI).
The criterion “not carried out as a profession” refers to situations in which the remuneration received is minimal in relation to the number of hours spent by the volunteer. It has previously been stated that remuneration of €4.50 or less per hour (for volunteers under the age of 23: €2.50 per hour) constitutes voluntary work. In the event of a higher hourly remuneration, the (potential) withholding agent must prove that the work is nevertheless voluntary.
During the parliamentary debate on the 2015 Tax Plan, State Secretary Wiebes stated that, following the introduction of the work-related expenses scheme (WKR), the treatment of volunteers’ remuneration would remain unchanged from the current practice. The WKR is scheduled to be fully implemented on 1 January 2015.
Under the WKR, allowances and benefits in kind provided under the volunteer scheme (i.e. within the limits of €150/€1,500) cannot be included in the wage bill on which the discretionary allowance (1.2%) is calculated. Nor is it possible, without incurring additional administrative burdens, to provide a volunteer with further tax-free allowances or benefits in kind under the discretionary allowance, in excess of the €150/€1,500 limits. Any allowance or benefit in kind within the discretionary allowance would then cause the €150/€1,500 limits to be exceeded, with the result that the volunteer scheme would no longer apply. The remuneration that the volunteer receives under the volunteer scheme is, of course, not charged to the discretionary allowance.
Volunteers who receive benefits under a social security scheme (such as unemployment benefit or income support) would be well advised to check whether that scheme allows them to carry out voluntary work (even if they are not paid for it) and/or to receive a volunteer allowance.