Guide to the work-related costs scheme in 2024 (for the Netherlands)

Employee gifts

An increasing number of private and public organ­i­sa­tions are taking ini­tia­tives to make themselves more attractive as employers. Individual recog­ni­tion plays a major role in this. Employee gifts also offer an ideal oppor­tu­ni­ty to optimise your employees’ salaries. This blog gives you a clear overview of the options and outlines the legal conditions for each one.

In the Nether­lands, the legal conditions regarding employee gifts were simplified from 1 January 2015 through the work-related costs scheme. This scheme allows you to spend 1.92% of the taxable wage bill, up to €400,000, freely on your employees. If the wage bill is above that, you may spend 1.18% freely. This is called the dis­cre­tionary scope (‘vrije ruimte’ in Dutch).

To secure a tax-friendly employee gift, you now only need to consider two things:

• The total wage bill = Total wages + social con­tri­bu­tions payable by the employer
• The usual value of gifts within the company / industry

We dis­tin­guish between tax exemption for the employee and tax deductibil­i­ty for the employer.

The discretionary scope

The dis­cre­tionary scope is rede­ter­mined every year. In 2024, the dis­cre­tionary scope on your taxable salary up to €400,000 is 1.92%. On the amount of the wage bill above €400,000, the dis­cre­tionary scope in 2024 is 1.18%.

Rule of thumb:
Loonsom ≤ 400.000 = 1,92%
Loonsom ≥ 400.000 = 1,18%

Tax-free allowance

That dis­cre­tionary scope can be spent on untaxed allowances*, including employee gifts. As long as you stay within that scope, you don’t pay payroll tax. Outside that dis­cre­tionary scope, you pay a higher final tax rate of 80% on the part that exceeds that dis­cre­tionary scope.

Example:

• Christmas gift
• Birthday gift
• Gym sub­scrip­tion 
• A good chair for their home office

Tax-free home­work­ing allowance

Since 2022, you are allowed to give employees a tax-free allowance for expenses they incur when working from home such as gas, water, elec­tric­i­ty, toilet paper, coffee and tea. This taxfree allowance increases to €2,35 per day in 2024.

With the exemption of the home­work­ing allowance, working from home or hybrid work is officially part of the work culture in the Nether­lands. The allowance is therefore not deducted from the tax-free allowance for employee gifts.

So it pays to keep a close eye on that dis­cre­tionary scope. In doing so, it is best to take into account the fringe benefits* you offer to your employees. The fringe benefits are the rewards you agree with your employee on top of their salary. These may be financial in nature, but not nec­es­sar­i­ly. A company bicycle or car, a thirteenth month’s salary or company savings are examples.

Confused? This short example of a cal­cu­la­tion explains the scheme:

Finally, you need to consider the usability test. This prescribes that the value of gifts should not deviate by more than 30% from what is usual within your company or industry. Read more about it here.

Tax deductibility for employers

Costs for staff gifts and Christmas hampers serve alimited business purpose. These are therefore mixed costs, which are not deductible for income or corporate tax up to a threshold amount. This threshold goes up from €5,100 to €5,600 in 2024.

For income tax, €5,600 of mixed costs are not deductible from your profit. You may also choose to use the 80% rule in your tax return. This allows you to deduct 80% of the mixed costs, but not the other 20%. You can therefore choose the approach that is most beneficial to you.

For corporate tax, things work slightly dif­fer­ent­ly. A company subject to corporate tax may not deduct up to €5,600 of mixed costs from its profit. Or 0.4% of the company’s total wage bill, whichever is higher. There is also an alter­na­tive corporate tax arrange­ment that allows companies to as standard deduct only 73.5% of mixed costs, and therefore 26.5% are non-deductible.

The €25 rule

Do you give your employees a gift that isn’t really linked to the employer-employee rela­tion­ship? In that case, we refer to ​‘pay’,
and that amount will not be part of the dis­cre­tionary scope. That amount will be subject to the €25 rule, and is exempt from tax.

Take, for example, a mourning wreath, which is a gift given out of courtesy and sympathy. The gift is given based on a personal rather than pro­fes­sion­al rela­tion­ship.

Three conditions apply in this case:

1. It concerns a personal gift in a situation where others would also give such a gift (e.g. newborn, birthday, marriage, illness, etc.)
2. You don’t give money or a voucher
3. The gift does not exceed €25 (incl. VAT)

Zero valuations

Certain workplace facilities don’t count as part of the dis­cre­tionary scope. They are given a socalled zero valuation. These may include:

• Workwear
• Coffee and tea in the workplace
• Gym at the workplace

The tax author­i­ties provide an overview of benefits in kind for which a zero valuation applies in the work-related costs scheme. (only in Dutch)

The work-related costs scheme in practice

Buying employee gifts doesn’t stop at arranging a gift. Admin­is­tra­tive processing for the Tax Office is also an important part of the work involved. By correctly and cleverly applying the reg­u­la­tions offered by the work-related costs scheme, as an employer you can avoid unnec­es­sary extra charges.

How to record them correctly? This flowchart will make it clear.

This flowchart is purely infor­ma­tive. No rights can be derived from it and it is not exhaustive. The exact design of the work-related costs scheme varies depending on the organ­i­sa­tion and occasion, and is entirely the respon­si­bil­i­ty of the organ­i­sa­tion. For a more complete overview, please refer to this document from Interfisc (in Dutch).

Basis for your admin­is­tra­tion
The checklist below can guide your gift policy. Or you can use it to incor­po­rate existing policies into a similar checklist. Your gift policy often includes specific amounts for gift-giving occasions. You can then also work those amounts into a checklist as in the example below. Don’t yet have a targeted gift policy? You can also make a dis­tinc­tion between gifts above and below €25.

Gifts

Physical gifts

Build better rela­tion­ships with beautiful gifts for any occasion. Would your business partner/ employee prefer fragrant flowers, delicious chocolate or a sharing basket? You know best what to choose.

Score some extra points by per­son­al­is­ing your gift or its packaging. This way the lucky recipient will never forget who the gift was from. You can also add a message to thank, con­grat­u­late or give your employee or business partner a bit of a boost – turning it into a unique gift.

Gift cards

Trying to find a personal gift for everyone often seems like an impossible task. But it can be done. More and more companies are turning to gift cards that the employees or business partners can use to choose their own gift from a range of par­tic­i­pat­ing retailers. Gift cards also come with another benefit: they aren’t subject to VAT. For this reason, and the fact that employees get to choose for themselves, gift cards are becoming more and more popular each year.

A lot of retailers offer gift cards. The downside is that gift cards often have a limited validity and, as the giver, you are again choosing the gift on behalf of the recipient. To avoid that, consider using providers like Giftcards​.nl, Primera and Kadonation.

These companies offer gift cards redeemable at a range of affiliated partners so that every employee or business partner has plenty of choice when it comes to spending their gift card. This way, the recipient can choose the gift they really want.

Kadonation Gifts

At Kadonation, we even take it a few steps further. Firstly, we offer a range of physical gifts: brownies, drinks, flowers, cake, gift baskets… There’s something for everyone. Secondly, we also have the Kadonation Gift Card that can be combined and split, and is redeemable at over 90 popular shops (such as Bol​.com, Rituals, Coolblue, Zalando, HEMA, Dille & Kamille & Decathlon …) and charities.

The gift voucher can also be completely customised with the recipient’s name, a personal message and your company logo or other branding. Our physical gifts can also be per­son­alised with a logo and/​or a personal message.

On top of that, we offer the ultimate choice concept: Kadonation Smile. The simplest way to give the freedom of choice. Together, we’ll put together a range of gifts to match your budget. The recipient can then choose their dream gift on a gift website that is completely per­son­alised with your logo, company colours and personal messages.

And of course, our gifts also meet all the conditions for you to get the most out of the legal conditions described in this white paper.