What is the Work-Related Costs Scheme (WKR)?
The WKR allows employers in the Netherlands to reimburse or provide certain benefits to employees tax-free, as long as the total value of these benefits remains within a defined “free space.”
If the amount of these allowances exceeds the free space, an additional 80% tax must be paid on the excess amount. Therefore, it’s important to ensure you do not exceed this limit.
How to calculate the free space
In 2026, the free space is 2.00% of the first €400,000 of the total taxable salary and 1.18% on the portion exceeding €400,000. Within this free space, you can provide tax-free benefits to your staff.
What costs and benefits are covered by the WKR?
Make an inventory of all payments and benefits you provide to employees that are not part of their regular salary. These costs can appear both in the payroll and in the financial administration.
Some examples include gifts for staff, staff outings or dinners (off-site), company bicycles, fitness allowances, and tax-free bonuses.
Three categories that are not considered reimbursements under the WKR are:
- Targeted exemptions
- Nil valuations
- Intermediary costs
Payroll and financial administration considerations
The free space is based on the total taxable wages, minus any tax-free allowances that fall under the WKR, as recorded in the payroll administration. Personnel costs from the financial administration, such as gifts, employee parties or off-site dinners, etc., must also be deducted from the available free space.
Please note: You cannot carry any unused free space over to the following year. If no expenses have yet been incurred within the WKR free space, you could, for example, give your employees a tax-free bonus. DGA’s who are on the payroll themselves can also make use of this.
Keeping WKR records
Employers are required to keep WKR records, as the Dutch Tax Authority (Belastingdienst) may review your WKR administration. Need Assistance? If you need advice or assistance with utilising the WKR, consider consulting one of our tax professionals for guidance.
