The government is currently requiring people to work from home as much as possible. So what is the situation regarding travel allowances? Do you still have to pay these to your employees?
Fixed travel allowance for commuting
It is, of course, logical that you can stop paying the travel allowance for commuting as soon as those kilometres are no longer travelled. After all, the employee is working from home.
As an employer, you are also under no legal obligation to continue paying travel expenses. Even if an employee is off work, for example due to illness, you are not obliged to continue paying their home-to-work travel expenses.
The same applies to allowances for other expenses which the employee no longer incurs as a result of illness or some other circumstance. For example, the variable components of a fixed expense allowance. Exactly which costs these are depends on the specific costs (or types of costs) on which the fixed expense allowance is based (for example, business dinners with clients are often a component of a fixed expense allowance).
Derogation
Although you are not obliged to reimburse commuting expenses, the employment contract, a set of terms and conditions of employment or a collective agreement may contain a provision to the contrary.
If, for example, the collective labour agreement states that an employee remains entitled to travel expenses whilst absent, you, as an employer, are obliged to pay them. This may also apply in situations where the employee is off work due to illness. You should therefore always check for any different provisions in the employment contract, the terms and conditions of employment or the collective labour agreement.
Tax-free allowance
You may pay a travel allowance tax-free for the purposes of payroll tax and income tax, provided that the allowance does not exceed €0.19 per kilometre (there are various other options available for travel by public transport).
You may base a flat-rate allowance for commuting on the actual number of kilometres. As soon as circumstances change, you must adjust the flat-rate allowance accordingly.
There is also a flat-rate scheme, under which the fixed allowance for travel expenses between home and work may be calculated as follows: 214 days * travel distance (return) * €0.19.
This flat-rate calculation is based on full-time employment. For people who do not travel to work every day of the week (part-time workers, home workers and the like), the allowance must be reduced in proportion to the number of days (usually) travelled (for someone who works 4 days: 4/5 * 214 * distance * €0.19).
Please do not travel for the time being
If an employee is temporarily unable to travel from home to work, for example due to illness (or, as is currently the case, because they are working from home on an occasional basis), the employer may continue to pay the fixed travel allowance tax-free for up to 6 weeks. You can find this (among other things) in the Handbook on Payroll Taxes.
Where a prolonged absence is expected, the fixed travel allowance may continue to be paid tax-free during the current month and the following month. After that, the employer has a choice:
- to stop paying the fixed travel allowance (insofar as this is permitted under the terms and conditions of employment);
- pay income tax on the travel allowance (the employee will then receive a lower net travel allowance, unless the income tax – which is then added to the gross amount – is payable by the employee).
If an employee resumes travelling after a prolonged absence, payment of the tax-free fixed travel allowance must not be resumed immediately. It may only be resumed in the month following the month in which the travel pattern was resumed.
Approvals during the coronavirus crisis
In a policy decision It has been stipulated that, whilst this decision remains in force, deviations from the usual travel pattern shall not give rise to any consequences in respect of payroll taxes (this applies to both fixed travel allowances and travel allowances based on retrospective calculation). With regard to this approval, the decree applies retroactively from 12 March 2020 and remains in force until 31 December 2020. As a stopgap measure, this period has been extended until 31 January 2021. In mid-January 2021, the Government will decide on the (further continuation of the) various tax measures taken in the context of the coronavirus crisis.
The decision also approves the employer’s continuation of other fixed allowances. In doing so, the employer may continue to rely on the facts on which the allowance is based. This approval has not been extended until 31 January 2021 and therefore expired on 31 December 2020.
PLEASE NOTE: this approval does not apply to the 30% scheme.
Where an employee is able to opt for a fixed travel allowance (cafeteria scheme), the approval applies only if the choice is made by 12 March 2020 at the latest.
Reporting changes
The payroll administrator is by no means always able to determine whether an employee has actually incurred the expenses covered by a fixed (travel) allowance. You should therefore ensure that they are informed in good time, so that the payment of (fixed) (travel) allowances can be stopped in good time or so that payroll tax on these allowances can be paid in good time.
Company car
The additional tax liability for a company car naturally continues as normal whilst an employee is working from home. After all, the car is still at the employee’s disposal, including for private use. The fact that use of the car has decreased significantly during the coronavirus crisis does not alter this. We assume that, during the coronavirus crisis, the Tax and Customs Administration will not insist that the additional tax liability must exceed the flat-rate amount, given the (virtually) complete absence of business use of the car.
An employee who wishes to avoid the additional tax liability must return the (van) to their employer. Please note, however, that there must be conclusive evidence that the employee has had no access to the car whatsoever. It is also strongly recommended that the car is not driven during the period in which it has been returned.
Employees will generally be required to pay the full personal contribution for the private use of a company car, even if such private use has been significantly reduced due to the coronavirus crisis. Naturally, this depends on the specific arrangements made regarding the personal contribution.
In the case of delivery vans that are normally used on a rotating basis, a problem may arise where they are no longer used on a rotating basis. In that case, instead of the final levy of €300, an additional tax liability would have to be applied to the employee in whose driveway the delivery van is left unused. Hopefully, the Tax and Customs Administration will take a lenient approach in this regard as well.
Costs of working from home
When an employee works from home, this usually results in additional costs. These include, for example, energy costs (the home office needs to be heated, the lights need to be on, and so on) and the costs of using a (mobile) phone and internet connections.
These costs can only be reimbursed to the employee tax-free within the ‘free space’ of the work-related expenses scheme. The discretionary allowance amounts to 1.2% of the employer’s total wage bill (for the portion of the wage bill up to €400,000, the discretionary allowance is 1.7%). For 2020, the discretionary allowance for the first €400,000 of the wage bill has been increased to 3%.
As many employers also use this allowance for other allowances and benefits in kind, there is often little scope to reimburse the additional costs of working from home on a tax-free basis.
Now that many employees are working from home as a result of the coronavirus crisis, it has been proposed to temporarily introduce an additional targeted exemption under the payroll tax scheme, which would make it possible to reimburse these costs tax-free without having to draw on the discretionary allowance. So far, the government has not yet responded to this proposal.
At home abroad
For employees who do not live in the Netherlands, working from home due to the coronavirus crisis does not result in them becoming covered by social security in their country of residence. This is reported by the Social Insurance Bank on its website. PLEASE NOTE: if you enjoy working from home and continue to do so after the coronavirus crisis, you may still be covered by social security in your country of residence. See our article People working from home in their country of residence are insured