SEO Economic Research evaluated the Work-Related Expense Scheme (WKR) last year, covering the period from 2019 through 2024. The evaluation shows that the WKR is fundamentally effective, but that certain aspects of the scheme could be simplified. The government has since responded to this study. Below, we outline the key recommendations that the government will take into account in its August decision-making process.
Elimination of the first bracketof the discretionary allowance
The discretionary allowanceis currently calculated across two brackets: 2% on payroll up to €400,000 and 1.18% on the amount exceeding that threshold. The proposal is to apply a single percentage rate to the total payroll. The general view is that this could simplify the scheme for employers.
Abolition of the Targeted Exemption for Employee Discountson Company-Owned Products
The government is exploring the possibility of abolishingthe targeted exemptionfor employee discountson company-owned products. This exemption currently allows companies, under certain conditions and to a certain extent, to offer tax-free discounts to employees on products specific to their industry. If abolished, this will have to be accounted for through the discretionary allowance.
For more information, please refer to our previously published article: Measures Regarding Travel Expense Reimbursement and Discounts on Industry-Specific Products – Govers Accountants / Advisors.
Abolishing the Service Time Exemption (Anniversary Bonuses)
Currently, upon reaching a 25- or 40-year service anniversary, one month’s salary may be paid out tax-free. SEO recommends abolishing this exemption.
Allowing Concurrent Home Office and Commuting Allowances
Currently, it is not permitted to provide both a tax-free home office allowance and a tax-free commuting allowancefor the same workday. The proposal is to allow this combination, for example, when an employee works from home for part of the day and is present at the workplace for the other part.
Increase in final tax if the tax-free allowance is exceeded
If the tax-free allowance is exceeded, a final taxof 80% is currently due. The government is examining whether this percentage can be better aligned with the average marginal tax burden.
Other Points of Interest
In addition, the following topics, among others, are being further examined:
- Possible introduction of a targeted exemption for directors’ and officers’ liability insurance premiums.
- Inclusion of practical examples regarding the designation of final withholding tax wages in the Payroll Tax Manual.
- Statutory enshrinement of the €2,400 effectiveness threshold, with annual indexation.
- Ways to encourage employers to help employees pay off student loans.
The government has indicated that it will maintain the current WKR system. On Prinsjesdag 2026, it may become clear whether and to what extent the above proposals will be adopted and when they will take effect.
Govers’ Response
In our view, both the SEO study and the government’s response to it are highly detailed. Fundamental questions regarding the scope of the concept of “wages” remain underaddressed. For a more detailed discussion of the evaluation of the work-related expenses scheme, we refer you to the article by our colleague Maarten van der Steen in *Beloning & Belasting*: “Fifteen Years of the Work-Related Expenses Scheme—On Evaluation and Evolution.” See this document to access the article in question.
Finally,
If you have any questions after reading the above, please feel free to contact your Govers representative or the Payroll Tax Focus Group at loonheffingen@govers.nl or by phone at 040 2504 504.