The work cost scheme, in short WKR, provides a budget with which the employer can still provide meals without having to pay payroll tax or a final tax on it, the so-called free space. And in order to offer companies some – much needed – support during the Corona Crisis, this arrangement has been temporarily extended. In this blog you can read about the WKR and how to combine it with Oh My Lunch.
Since 2015, the Work Cost Scheme (WKR) has been in force in the Netherlands. This mandatory part of payroll administration provides tax advantage for various benefits to employees, for example on the provision of lunch. And in order to offer companies some – much needed – support during the Corona Crisis, this arrangement has been temporarily extended. In this blog you can read about the WKR and how to combine it with Oh My Lunch.
With Oh My Lunch, a delicious and responsible lunch for your top team is arranged in just a few steps. And OH MY, so much is to be gained by good LUNCH! Enjoying a fresh meal together entirely according to individual preferences, a moment to re-boost and catch up or get to know each other better. Getting back to work with new energy. Especially in these times of social hardship, we may need those moments even more. Albeit in a responsible way, of course. But what about the costs? If you as an employer pay (part of) lunch for employees, how does that work from a tax point of view? Thanks to the WKR, you can also benefit from this.
A non-business lunch provided or reimbursed by the employer is seen by the Tax Authorities as an additional wage paid, and therefore taxed additionally in the form of a final tax (80%). The work cost scheme, in short WKR, provides a budget with which the employer can still provide meals without having to pay payroll tax or a final tax on it, the so-called free space. The amount of this spending space is 1.7% of the total wage bill (up to EUR 400,000 per year, for everything above that a lower percentage of 1.2% is used).
A company with a wage bill of EUR 400,000 therefore has an annual free space of EUR 6,800, to be spent on, for example, lunch in the company canteen. No payroll tax is payable on everything that is reimbursed or provided within this space. A standard amount of EUR 3.35 has been set for meals. This means that an employer may place EUR 3.35 per lunch in the available free space within the WKR. Any employee's own contribution may be deducted from this amount. Let us give you an example of calculation;
You provide an employee with lunch in the company canteen for EUR 10.00. The employee pays an own contribution of EUR 2.00. The standard amount for meals (EUR 3.35) minus the own contribution (EUR 2.00) will be considered as an additional wage, in this case EUR 1.35. This amount may be accommodated within the free space of the WKR. No final tax will then be payable on the provision. Please note, this applies as long as the total amount of the free space is not exceeded.
The WKR is a mandatory part of the payroll administration. In many accounting software, the scheme is already integrated and a possible WKR part can be automatically linked to ledger accounts. You can declare the final tax annually after the end of a calendar year, or per reporting period. Very useful to know; the benefits in kind do not have to be kept in the accounts per employee but only as a total amount. Saves a lot of red tape.
The Corona Crisis is intense, for businesses as well. Besides all of the restrictions, fortunately, the government is introducing financial measures that can give some air in tight times. For example, the WKR has been extended for 2020 and 2021. The free space has been increased from 1.7% to 3.0%, which in practice yields an additional budget of no less than EUR 5,200 with a wage sum of EUR 400,000. Which makes a total of EUR 12,000. That's a lot of lunch! The regulations also offer opportunities to accommodate working from home - currently being the new standard - in additional costs or simply to be a little nice to your staff in these tough times, without the extra wage costs afterwards.
When setting up an account with Oh My Lunch we can set-up partly paid lunch by the employee and employer, or fully paid by either the employee or employer. In that way you can enjoy the perks of lunch at the office with the benefits of the WKR. With some extra support of the government, this is the time to get back into a healthy and strong team. So, let's have lunch!
Source: Manual for Payroll Taxes 2021, Tax And Customs Administration, 2021 (https://www.belastingdienst.nl/wps/wcm/connect/nl/personeel-en-loon/personeel-en-loon)
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