1. Work-related Expenses Scheme nr. 1 – 2016 Tax Special Part I
Work-related Expenses Scheme
nr. 1 – 2016 Tax Special Part I
The Work-related Expenses Scheme became
mandatory for all employers as per 1 January
2015. The first date submission of the final levy
components is in the wage tax return of
January 2016. In addition, the standard practice
criterion has been tightened as per 1 January
2016, the interest benefit of a staff loan is no
longer valued at nil and a number of
predetermined amounts have been adjusted.
Therefore, please find in this newsletter a brief
update of the Work-related Expenses Scheme,
including setting up for 2015, the group policy
and the tightening of the standard practice
criterion.
Please be informed that the 2016 Tax Special
Part I is the first newsletter of a series. The
2016 Tax Special Part II will contain an update
related to the interest benefit of the staff loan
and some common allowances and benefits will.
Settlement for 2015 with the declaration
of this month, January 2016
If the discretionary margin (1.2% of total wage
bill for tax purposes) is exceeded, there is a
final levy of 80%. The final levy must be
included in the wage tax return in January
2016, which must be submitted and paid, at
latest at the end of February 2016.
In order to determine the final levy
components, it must be clear which allowances,
benefits and provisions are designated as such.
Currently, it is not entirely clear when this
designation must have taken place at the latest,
and how. Based on a Decree of the Minister of
Finance the Tax authorities assume that, in case
no individual remuneration has been taken into
account during the calendar year, the
remuneration has been appointed as final levy
component. Please note that no further
prescribed form for this recognition is provided
and as a result this can take place in the
financial accounts as well as, for example, in an
Excel file.
We highly recommend you to make sure your
accounts are in order and that the final levy
components are identified. This prevents the
Tax authorities from individually taxing
employees later for certain allowances, benefits
and provisions.
Group policy
In general, under the group policy, the
aggregate wage costs of the companies within a
group are added together for purposes of
calculating the discretionary margin. An
advantage of applying the group policy is that
the not used discretionary margin of one
withholding agent can be set off against the
exceeded discretionary margin of the other
withholding agent. As a result, less or no final
levy could be due.
You can opt for the application of the group
policy when submitting the declaration of
January 2016 at the latest.

2. Work-related Expenses Scheme nr. 1 – 2016 Tax Special Part I
The group policy can be applied by a
withholding agent together with another
withholding agent, if the following requirements
are met during the entire calendar year:
 the withholding agent has a stake of at
least 95% in such other withholding
agent; or
 such other withholding agent has a
stake of at least 95% in the withholding
agent; or
 a holding company has a stake of at
least 95% in the withholding agent,
while this holding also has a stake of at
least 95% in the other withholding
agent.
Please note that a stake involves a stake in
the share capital.
If the group policy is opted for, this will apply to
all group entities that have met the ownership
requirement of at least 95% during the entire
calendar year. Therefore, it is not possible to
exclude specific group members.
TIP
The group policy can also be applied in case
there is an intermediate holding company
without employees.
An advantage of the group policy is that a
collective margin is created for all withholding
agents of the group. The withholding agent with
the highest total wage bill for tax purposes
declares the final levy as a result of exceeding
the combined discretionary margin and pays
this. Please note that all withholding agents of
the group are liable for the final levy due.
Furthermore, all withholding agents of the
group are obliged to include certain reporting
items in their accounts.
Tightening of standard practice criterion
for Work-related Expenses Scheme
In general, the standard practice criterion puts
a limit on the allowances and benefits that can
be allocated to the discretionary margin.
Further, your allowances and benefits cannot be
allocated to the discretionary margin if they
differ more than 30% from that which is
normally paid or provided.
As per 1 January 2016 the criterion has been
tightened. Not only the allowance or benefit
itself should be customary, but it must also be
customary that your employees receive such
allowance or benefit tax-free and that taxation
is for your account via the final levy.
Please note that this newsletter is intended to
provide general information only. Professional
advice is highly recommended before
committing to formal obligations.
Contact
If you have any questions or comments related
to this newsletter, or any other tax related
questions, please contact Marc van den Dungen
or Eline Nouwen of Auren, the Netherlands.
They are more than happy to assist you.
Auren Amsterdam
Biesbosch 225
1181 JC Amstelveen
Postbus 15968
1001 NL Amsterdam
Marc van den Dungen LLM
Tax Partner
+31 20 645 8281
marcvandendungen@auren.nl
Eline Nouwen LLM
Tax Advisor
+31 64 576 0867
+31 20 645 8281
elinenouwen@auren.nl