In a letter to the Lower House, the outgoing Minister of Finance, Mr. De Jager, announced a simplification of the new work-related costs rules that will take effect in 2011. This concerns a simplification of the corresponding implementation regulation, which the business community has been calling for.
The work-related costs rules will take effect as of 2011. The exemptions for payroll tax and social security contributions with regard to tax-exempt reimbursements and allowances will then cease to apply. Under the work-related costs rules, all employment-related benefits are to be considered as salary. This includes not only gross salary, holiday allowance and profit sharing, but also reimbursement of expenses and allowances. However, under the proposed work-related costs rules, 1.4 % of the total employment income for tax purposes may remain untaxed. In addition, a number of specific exemptions will be introduced for costs covering education, courses, outplacement, travel, business meals (as a result of overtime), accommodation (for example, hotel stays during foreign trade fairs or coffee on long business trips), moving expenses and extraterritorial expenses for expats – including the 30% rule. For 2011, 2012 and 2013, the following transitional rules apply: an employer can choose each year whether to apply the work-related costs rule or the current rule for tax-free allowances and reimbursements.
Reactions to the draft implementation regulation
During the summer, employers, umbrella organizations, tax advisors, and other interested parties were able to respond to the draft implementation regulation, in which specific details of the work-related costs rules were set-out. As a result of the reactions received (62 in total), the Ministry of Finance has made a number of changes to the implementation regulation. For example, the two separate allowances for hot and cold meals will be replaced by one standard meal allowance. And, contrary to what was originally proposed, in-house company fitness facilities will be qualified as an untaxed benefit.