Work-Related Costs Scheme (WKR): Complete Guide for Employers and Employees in Utrecht
The work-related costs scheme (WKR) allows employers in Utrecht to offer tax-free reimbursements and benefits to staff within a specific 'free space'. This portion of the payroll enables secondary employment conditions, such as commuting expense allowances to the city center or a Sinterklaas surprise, without wage tax for the employee. For businesses in the Domstad, this is essential to remain competitive. More on commuting allowances and WKR in Utrecht. For questions, contact Utrecht Legal Advice Centre for free advice.
What Does the Work-Related Costs Scheme Mean for Utrecht?
The WKR governs the tax treatment of non-delivery costs, such as reimbursements for public transport in Utrecht, smartphones, or office lunches. Since its introduction in 2011, everything has been streamlined under one system: employers may spend a fixed percentage of the taxable payroll tax-free. Exceeding the free space incurs 80% tax on the excess.
Key point: targeted exemptions, such as commuting costs (ideal for Utrecht cyclists and tram users), remain tax-free and outside the free space at all times. This provides flexibility, especially for SMEs around Utrecht offices.
Legal Basis of the WKR
Anchored in the Wage Tax Act 1964, Article 31, employers in Utrecht may use a fixed percentage of the taxable payroll (gross salary plus holiday pay) as free space. The Tax Authorities set the percentage annually. For 2024: 1.92% up to €400,000 payroll and 1.18% above that (Tax Authorities 2023). Report via the portal in payroll tax returns; errors risk assessments. For disputes: District Court of Utrecht.
| Year | Free Space (% of Payroll) | Notes for Utrecht |
|---|---|---|
| 2019 | 1.80% | Standard for local businesses |
| 2020-2023 | 1.70% | Adjusted due to COVID impact |
| 2024 | 1.92% (up to €400k), 1.18% above | Extra for vitality, relevant for Utrecht offices |
Calculating Free Space for Your Utrecht Business
Free space = fixed percentage × payroll. Example: €1,000,000 payroll in 2024 for a Utrecht employer: (1.92% × €400,000) + (1.18% × €600,000) = €7,680 + €7,080 = €14,760 tax-free. Excess? 80% taxed, but deferrable (max. 80%). Use Tax Authorities tools or consult Municipality of Utrecht for local HR support.
Targeted Exemptions and Utrecht Practice
Always tax-free outside free space:
- Commuting expenses (up to €0.23/km or €0.21 public transport in 2024, perfect for Utrecht commuters).
- Business phone/internet.
- Work-related training.
- Relocation costs to Utrecht.
Practical WKR Examples in Utrecht
Example 1: Utrecht office worker. €200 public transport reimbursement (exempt), €50 package of bonbons, and €300 laptop (free space). With €500,000 payroll (€9,600 space): well within budget.
Example 2: Utrecht SME Overspend. €200,000 payroll (€3,840 space), €5,000 on parties: €1,160 excess × 80% = €928 tax.
Example 3: Vitality. Extra budget for yoga or canal bike routes since 2021.
Rights and Obligations under WKR for Utrecht Residents
Employers:
- Obligation: Keep records and file returns; retain for 7 years.
- Right: Flexible benefits.
Employees:
- Right: Enjoy tax-free benefits.
- Obligation: Report private use.
Frequently Asked Questions about WKR in Utrecht
What if free space is exceeded?
80% tax on excess. Plan ahead or defer; advice via Utrecht Legal Advice Centre.
Do Utrecht commuting costs fall under WKR?
No, targeted exemption. Details here.
WKR with Utrecht collective agreement?
Yes, if tax-compliant; check locally.
Freelancers in Utrecht?
Not under WKR; VAT rules apply. Agency workers via client.
Tips for Optimal WKR Use in Utrecht
- Plan early: Calculate space and discuss with team, considering local public transport.
- Prioritize smartly: Maximize targeted exemptions like bike allowances.
- Monitor: Use tools and consult Utrecht Legal Advice Centre.
- Vitality boost: Invest in health for extra space.