MKB Juristen drafts custom legal documents
It is best not to cobble together or copy important contracts, terms and conditions, and other legal documents yourself. We help entrepreneurs on a budget with customized legal solutions, clear costs upfront, and practical explanations.
- Custom contracts, terms and conditions, and legal documents
- Budget-friendly and clear about the costs upfront
- Request a free consultation or a no-obligation quote
The Work-related Costs Scheme (WKR) determines how employers may provide tax-free allowances and benefits to employees. Below the tax-free allowance (2.03% on the first €400,000 of the total payroll + 1.18% on the excess in 2024), these are tax-free. Above this amount, a final levy of 80% applies to the employer. In addition, there are targeted exemptions (travel expenses, telephone, training costs) that do not count towards the tax-free allowance. Below is an explanation of how it works.
The short answer
- Free margin 2024: 2.03% on the first €400,000 of the total payroll, 1.18% on the excess.
- Targeted exemptions: for specific costs (travel, telephone, study) — are not charged against the available allowance.
- Final levy: 80% on the excess tax-free allowance.
- Administration: the employer determines whether the reimbursement/provision is taxed as wages or as a WKR reimbursement.
The free space
Specifically for 2024:
- First €400,000 payroll: 2.03% tax-free allowance. E.g., with a €400,000 payroll: €8,120 tax-free allowance.
- Above that: 1.18% on the excess. E.g. for a total of €1,000,000: €8,120 + 1.18% × €600,000 = €15,200.
Within the tax-free allowance, reimbursements and benefits are tax-free for both employee and employer. Above that, an 80% final levy applies to the employer.
Targeted exemptions
Outside the tax-free allowance, there are targeted exemptions — tax-free without reducing the tax-free allowance:
- Commuting and business travel allowance : €0.23 per km (2024)
- Meals during business trips or overtime.
- Education and study costs.
- Professional literature, trade union membership fees.
- Mobile phone and internet: for business use > 10%.
- Relocation allowance upon changing jobs.
- Outplacement following dismissal.
For the current list and exact conditions: Tax and Customs Administration Handbook on Payroll Taxes.
Zero rating
Some benefits have a “zero valuation” — not taxable and not used up any tax-free allowance. Examples:
- Workwear (uniforms, protective clothing).
- Occupational health and safety facilities at the workplace.
- Tools and equipment in the work environment.
- Provisions at the workplace (coffee, fruit, lunch at the office).
How do you administer it?
For each reimbursement/provision, choose a route:
- Taxed as wages: allowance is added to salary, payroll tax + social security contributions.
- Under targeted exemption: tax-free, no discretionary use allowance.
- Under nil valuation: untaxed, no free allowance for use.
- Charged to free space: tax-free up to the threshold.
You make the choice upon allocation. If the tax-free allowance is exceeded: 80% final levy.
Common mistakes
- Failure to designate allowances: then automatically taxable wage. Designation is mandatory for the WKR route.
- Ignoring the tax-free allowance: an 80% final levy can amount to thousands of euros per year.
- Incorrectly applying the targeted exemption: e.g. travel expenses exceeding €0.23/km from 2024.
- Insufficient record-keeping: it must be clear for each expense item which route has been chosen.
Honest recommendation
The WKR is not a sexy subject, but it is worth a few thousand euros a year for SME employers. Work together with your accountant: discuss at the start of the year what you will reimburse and how. Periodically (quarterly) checking whether you are still within the tax-free allowance prevents surprises at the end of the year.
For the broader HR context: employment contract.
Frequently Asked Questions
The tax scheme that determines how employers can provide tax-free allowances and benefits to employees. Free allowance of 2.03% on the first €400,000 of the total payroll + 1.18% on amounts exceeding that (2024). Above that, an 80% final levy.
The percentage of the taxable wage bill that may be reimbursed or provided to employees tax-free. In 2024: 2.03% on the first €400,000 + 1.18% on amounts exceeding that. Within this limit, no payroll tax or social security contributions are due.
Specific expense items that are tax-free without using the tax-free allowance: travel expenses (€0.23/km), training, professional literature, mobile phone, moving expenses, outplacement. Conditions vary by category — check the Tax and Customs Administration rules.
If the tax-free allowance is exceeded, the employer pays an 80% final levy on the excess. For example: €5,000 excess = €4,000 final levy. The employee pays nothing extra. A significant expense — to be avoided through careful planning.
Work clothing (uniforms, protection), occupational health and safety facilities at the workplace, tools, provisions at the workplace (coffee, lunch). No impact on tax-free allowance, not taxable for employee or employer.
Yes. Designation as a “final levy component” is mandatory for the WKR route. Without designation, the compensation is automatically treated as taxable wages — payroll tax and social security contributions payable by the employee. Designation per pay period or annually.
Plan ahead: calculate available allowance at the beginning of the year, consciously choose which reimbursements to charge, and use targeted exemptions where possible. Periodic check (quarterly) by an accountant. In case of impending overrun: rearrange costs or accept them.
