For Private Limited Companies (BV’s), it is essential to be aware of the Work Cost Scheme (WKR), a tax regulation that governs the treatment of reimbursements and provisions to employees. The WKR aims to reduce administrative burdens and provide more room for untaxed reimbursements. In this blog, we explore what the Work Cost Scheme entails and offer a guide for BVs to effectively leverage this scheme.
What is the Work Cost Scheme?
The Work Cost Scheme is a tax regulation that determines the treatment of reimbursements and provisions to employees within a BV. Instead of separately administering individual reimbursements and provisions, the WKR allows employers to spend a fixed percentage of the wage bill untaxed on these costs. The aim of the scheme is to simplify and provide flexibility in the tax treatment of employment conditions.
How Does the Work Cost Scheme Work?
According to the WKR, an employer may spend 1.7% of the total wage bill untaxed on reimbursements and provisions for its employees. This is called the free space. If the total amount of reimbursements and provisions exceeds the free space, the employer must pay wage tax on the excess. It is important to know which costs fall under the WKR and which do not.
Reimbursements and Provisions Under the WKR
Various reimbursements and provisions fall under the Work Cost Scheme, such as a Christmas package, a company outing, a company bicycle, meals at the workplace, and staff parties. Employers can also reimburse or provide certain costs, such as tools or a phone, untaxed. It is important to have a clear overview of the costs covered by the WKR.
Administrative Simplification
One of the benefits of the WKR is administrative simplification. Employers no longer need to specify individual reimbursements and provisions in their administration, as long as these fall within the free space. This not only saves time but also reduces administrative burdens for BVs.
Fixed and Individual Costs
Within the WKR, there is room for both fixed and individual costs. Fixed costs, such as providing fruit in the workplace, fall within the free space. Individual costs, such as a Christmas package per employee, must fit within the free space or be taxed separately. It is important to maintain a balanced distribution to optimize the use of the free space.
Optimal Use of the Free Space
For BVs, it is crucial to optimally use the free space. This can be achieved by consciously planning which costs fall under the WKR and which may be individually taxed. Evaluating the use of the free space throughout the year can also assist in strategically deploying employment conditions.
Advice and Tax Support.
Understanding and effectively leveraging the Work Cost Scheme can be complex, especially considering the many exceptions and nuances. It is highly recommended for BVs to seek professional advice, such as from a tax expert, to ensure compliance with the rules and maximize the benefits of the WKR.
Conclusion:
Understanding and effectively leveraging the Work Cost Scheme can be complex, especially considering the many exceptions and nuances. It is highly recommended for BVs to seek professional advice, such as from a tax expert, to ensure compliance with the rules and maximize the benefits of the WKR.
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