The work cost ruling will become effective as per 1 January 2015

On July 22, 2014 by Dutch Umbrella Company

State secretary Wiebes made an end to all to all doubts about the work cost ruling. As of the 1^st of January 2015 the work cost ruling will become effective for all employers in the Netherlands. This means there will be an end to the transitional arrangement. The work cost ruling is being adjusted on a few points. The adjustments are being included in the tax plan 2015 and will go into force from the first of January 2015.

The foundation of the work costs ruling will remain as it stands. With this ruling employers can give their employees tax-free compensations and financial regulations. This is based on a percentage of the fiscal wage. Examples of this are Christmas gifts, staff parties and the bike ruling. If you exceed this percentage (also called the free space) you have to pay 80% final levy over the excessive amount.

Which points of the work cost ruling will be adjusted?

The ruling will be adjusted on five points:

• The necessity criteria is new. This is an open norm. It assumes that what the employer sees as necessary, within the context of his operational management, he can give to his employees without having to deal fiscally with the private advantage of the employee.  For instance the difference in fiscal treatment between computers, smartphones and tablets is taken away.
• The employer only needs to establish once a year what his due taxes, within the context of the work costs ruling, are. Before this needed to be done every tax period.
• The concern ruling is also being introduced. With this a collective free space is being created. Under the old work cost ruling it was necessary to look at the wage per entity. It wasn’t possible to do this at concern level.
• There will be a exemption for employee discounts. The existing ruling for employees discount (maximum of 20% discount with a maximum of €500,- per calendar year per employee) will be continued under the work costs ruling.
• The difference between compensating, procuring and providing will be removed in the new work cost ruling.

True these measures the free space is being reduced from 1,5% to 1,2% of the total wage (fiscal wage) of a company. This percentage can be adjusted every year by the Dutch tax authorities.

Want to know more about the work cost ruling or questions about our service? Please contact us via +31 (0)20 – 820 15 60.