29 Apr Working in a tax-free home office
Working in a tax-free home office
29 April, 2021
Working from home became the norm last year. A well-equipped home office is vital for this purpose. As an employer, you can help your employees set up a home office. Through the work-related expenses scheme, you can reimburse, issue and provide certain items tax-free to your employees. This article describes which homeworking allowances, benefits in kind or provisions you can grant tax-free to your employees.
At present, employers can reimburse tax-free any health and safety equipment, tools, computers and other mobile communication devices that employees need to work from home. These items fall under the specific exemption in the work-related expenses scheme.
Health and safety equipment
Health and safety equipment includes office chairs, desks and desk lamps. However, you may reimburse your employees for these items under the specific exemption only if certain conditions are met. If the conditions are not met, you can still reimburse these items tax-free by designating them as a final levy component and including them in the discretionary margin of the work-related expenses scheme. The discretionary margin has been increased for 2021 under the coronavirus tax support measures and amounts to 3% of the first €400,000 of the wage bill for tax purposes and 1.18% of the remainder of that wage bill.
Tools and mobile communication devices
Employees often need tools and communication devices to perform their work duties. Employers can temporarily provide, reimburse or issue these items to their employees. As long as the employee needs the provided items to perform their duties properly and these items – if provided temporarily – are returned to the employer as soon as the employee no longer needs them, these items fall under the specific exemption in the work-related expenses scheme. These items can then be provided, reimbursed or issued tax-free to the employee.
If these items are not necessary, they can still be provided, reimbursed or issued tax-free by designating them as a final levy component and including them in the discretionary margin.
Fixed homeworking allowance
When working from home, your employees use more coffee, tea, toilet paper, electricity and water. You can contribute towards these expenses for your employees through a fixed homeworking allowance. The homeworking allowance for these expenses is tax-free only if you deduct it from the discretionary margin.
Fixed commuting allowance
Under certain conditions, you can grant your employees a fixed commuting allowance. One condition is that the allowance is based on an analysis of your employees’ travel costs. Working from home will likely affect your employees’ travel patterns. However, the Ministry of Finance has approved not adapting the fixed commuting allowance to the changed travel pattern for the first six months of 2021, provided this allowance was granted before 13 March 2020. From July 2021, the ‘old’ fixed commuting allowance can no longer be paid if the travel pattern has changed. In that case, the commuting allowance must be paid on the basis of an expense claim or it must be examined whether the criterion of 128 days of annual travel to a fixed place of work is met for applying a lower fixed commuting allowance.
The Netherlands has entered into bilateral agreements with both Germany and Belgium regarding the work and travel pattern of cross-border workers in their 2020 income tax return. In the 2020 income tax return, cross-border workers can choose whether they want to use the travel and work pattern based on the actual working days in the countries concerned or the travel and work pattern based on the hypothetical situation that the travel/work pattern is the same as in 2019 for taxation in both countries. For more information, see our earlier published article on these bilateral agreements.
Feel free to contact us with questions about working from home, the work-related expenses scheme, the fixed commuting allowance or choosing your optimal travel pattern. We are always happy to help.